Oil and Gas Severance Tax by State: Rates and Collections

Among the seven largest collecting states that tax oil on its value, statutory rates run from 4.6 percent in Texas to 12.5 percent in Louisiana for wells completed before July 2025, while Alaska taxes net value at 35 percent. What states collected in fiscal 2025 was a smaller share of production value: 4.4% in Texas and 8.3% in North Dakota, the lowest and highest of the five states whose Census totals compare cleanly with oil and gas value. Texas took in $8.00 billion and North Dakota $2.60 billion.

Texas alone accounted for 40.5% of the $19.8 billion that every state government reported collecting under Census item T53, severance taxes, and Texas, New Mexico and North Dakota together for 77.3%. A state’s share of that pot says who produces; the rate it works out to against the value of the barrels and cubic feet says how hard the tax bites. The two rankings differ. New Mexico produced 773 million barrels in the matching twelve months against North Dakota’s 431 million, yet North Dakota’s ten percent statutory structure leaves it with the higher effective rate of the two.

What the Census counted in fiscal 2025

The U.S. Census Bureau’s Annual Survey of State Government Tax Collections sorts state taxes into item codes. T53 is titled Severance Taxes, with no split by resource, so oil and gas share it with whatever else a state taxes on removal from the ground or water. The FY2025 file, last revised April 15, 2026, reports 32 jurisdictions with a positive T53 amount, 4 that report zero (Connecticut, Illinois, Missouri and Wisconsin) and 15 marked X. The file’s U.S. total is $19.76 billion.

The survey follows state fiscal years. Census says its statistics reflect fiscal years that end on June 30, except for Alabama and Michigan (September 30), New York (March 31) and Texas (August 31). Of the eight states in the table below, seven therefore cover July 2024 through June 2025 and Texas covers September 2024 through August 2025, which is why the production values later on this page are summed over each state’s own twelve months rather than over a calendar year.

These eight states are the table because they are the eight largest T53 totals in the file, a rule that can be checked by anyone with the file, and they hold 94% of the national total. The statutes in the next section are those eight states’. The remaining jurisdictions with positive amounts, from Montana at $0.23 billion down to much smaller sums, are not compared here, and neither are royalty and lease payments to federal and tribal landowners, which sit outside state tax collections.

Eight statutes, eight different bases

The headline rates look comparable and are not. Texas applies its rate to market value. Oklahoma uses gross value and West Virginia gross proceeds. Wyoming taxes the value of the gross product, Louisiana the value at the time and place of severance, and North Dakota the gross value at the well. New Mexico publishes combined rates by county and tax district. Alaska’s oil tax is a profit-style formula that starts from gross value and subtracts lease expenditures. For gas, North Dakota and Louisiana levy cents per thousand cubic feet that reset on formulas. Table 2 gives each state’s rates with the date of the official text behind them.

Texas: two chapters, two bases

Chapter 202 taxes oil at 4.6 percent of market value, or 4.6 cents for each 42-gallon barrel if that rate yields more, which at any price above $1.00 a barrel it does not. Chapter 201 taxes gas at 7.5 percent of market value and applies the same rate to liquid hydrocarbons other than condensate recovered from gas. Section 201.053 leaves untaxed gas injected into the earth in the state (unless sold for that purpose), gas from oil wells that is lawfully vented or flared, and gas used for lifting oil (unless sold for that purpose). Provisions that can lower the tax on a given well include a five-year exemption for hydrocarbons from a well designated two-year inactive, an exemption for reactivated orphaned wells, and a reduction for high-cost gas from wells completed after August 31, 1996 that runs for up to 120 months.

New Mexico: three state components and a local one

New Mexico publishes one table a year by county and tax district, with a column for each component and a total. Every oil row in the 2026-27 table carries the same 3.75 percent severance, 3.15 percent school and 0.24 percent conservation rates, which sum to 7.14 percent. Gas rows swap in a 4.00 percent school rate and 0.19 percent conservation, which sum with severance to 7.94 percent. The component that varies is the ad valorem production tax, shown by the department as AD /2, and it runs from 0.69 percent to 1.72 percent depending on the district, so the all-in oil rate ranges from 7.83 percent to 8.86 percent. The table for the previous period, September 2024 to June 2025, has the same three fixed components and a range of 7.85 to 8.87 percent.

North Dakota: two taxes that both attach to the royalty

Chapter 57-51 levies a gross production tax of five percent of the gross value at the well on all oil produced, attaching to the whole production including the royalty interest. Chapter 57-51.1 adds an oil extraction tax of five percent of gross value at the well. A trigger provision in section 57-51.1-02, written around wells inside a reservation, on trust land outside it, or straddling trust land, raises the extraction rate to six percent when the average WTI price exceeds the trigger price in each month of a three-month run. The trigger is $90, indexed each December to the producer price index for industrial commodities, and a tribe may elect to opt out of the increase. For gas the rate is four cents per thousand cubic feet multiplied by a gas base rate adjustment, the ratio of the producer price index for gas fuels to 75.7, which the tax department posts by June 1 for the fiscal year starting July 1. The current-year figure is not given here.

Oklahoma: 7 percent, with a 5 percent first three years

Section 1001(B) taxes oil and gas at seven percent of gross value and, in paragraph 3, taxes production from new wells at five percent for 36 months before the seven percent rate applies. Subsection K says that payment of the gross production tax is in lieu of other state and local taxes on the minerals and on the machinery and equipment used in and around a producing well, so there is no separate ad valorem column like New Mexico’s. Exemptions for secondary and tertiary recovery projects and for wells completed with recycled water are paid as refunds after the fiscal year, capped by statute at $15 million and $10 million a year respectively.

Wyoming, West Virginia and Louisiana

Wyoming’s 6 percent is built from 1.5 percent in the state constitution plus three statutory slices, and the tax is expressly in addition to ad valorem taxes on the same minerals. West Virginia’s 5 percent applies to gross proceeds, with a halved rate for low-volume non-shale wells and an exemption for the smallest wells. Louisiana’s oil rate depends on the completion date of the well: 12.5 percent before July 1, 2025 and 6.5 percent after, so the state’s rate on a given barrel depends on which well it came from.

Louisiana’s statute also exempts new horizontal wells. Under R.S. 47:633(A)(3)(d), production from any horizontally drilled well or horizontal recompletion is exempt from severance tax for 24 months or until the cost of completing the well is paid out, whichever comes first; for gas from wells completed on or after July 1, 2025 the period is 18 months or payout. How much is exempt depends on price. Each July 1 the secretary of revenue sets an oil price and a natural gas price from the average NYMEX price for the prior twelve months. Oil is exempt in full at or below $70 a barrel, 80 percent above $70 and up to $80, 60 percent up to $90, 40 percent up to $100, 20 percent up to $110 and not at all above that. Gas is exempt in full at or below $4.50 per million Btu, then 80, 60, 40 and 20 percent in steps up to $7, and not at all above it. For the year that began July 1, 2024 the department set the prices at $79.50 a barrel and $2.50 per million Btu, which made the exemption 80 percent for horizontal oil and 100 percent for horizontal gas (Revenue Information Bulletin 24-013). Production from wells deeper than 15,000 feet that began after July 31, 1994 is exempt for 24 months or until payout, and the gas tax does not accrue on gas injected for storage, on gas from oil or gas wells that is vented or flared if it is not otherwise sold, or on gas used as field fuel; gas injected to maintain pressure is taxed when first severed and credited against later tax. The 6.5 percent oil rate for wells completed on or after July 1, 2025 cannot appear in fiscal 2025 collections, since that year ended on June 30, 2025.

Putting a dollar value on each state’s production

A collections figure needs a denominator. The cleanest one would be the wellhead value of each state’s oil and gas, and the Energy Information Administration used to publish it. Its state natural gas wellhead price series has no values after 2010 for seven of these states and none after 1995 for West Virginia, and the U.S. series ends with 2012. The gas denominator therefore has to be built from volumes and a hub price, and the oil denominator from volumes and a purchase price.

For oil, each month’s state field production in barrels is multiplied by that month’s state crude oil first purchase price from EIA, and the twelve months are summed over the state’s fiscal year. For gas, each month’s state marketed production in thousand cubic feet is multiplied by the Henry Hub spot price for that month in dollars per million Btu and by 1.036 million Btu per thousand cubic feet, EIA’s conversion for natural gas. The simple mean of the twelve Henry Hub readings was $2.97 for July 2024 to June 2025 and $3.14 for Texas’s September 2024 to August 2025 window. Federal offshore production is not in EIA’s state series, which lists federal offshore areas separately, so Texas and Louisiana values cover onshore and state waters.

Valuing every state’s gas at Henry Hub is an assumption, and it flatters some states and shortchanges others. Gas produced in the Permian Basin has often sold below the Henry Hub price because of pipeline limits, a spread the Waha negative-price guide follows and the Henry Hub guide explains as a benchmark. That makes the Texas and New Mexico gas values here upper estimates, and so the effective rates for those two states are, if anything, a little low. The oil side uses each state’s own first purchase price, so it does not lean on a single benchmark. The production volumes come from EIA’s state series, the same source behind the US oil production by state ranking.

Collections as a share of value

Dividing each state’s fiscal-2025 collections by its value gives the effective rates in Table 4. Because severance tax is remitted some weeks after the month of production, the table also shows the same quotient with the twelve-month window moved back one month. The largest change anywhere in the table is 0.1 percentage points, so the timing choice does not move any conclusion.

Among the five states whose totals compare cleanly with oil and gas value, North Dakota is highest at 8.3% and Texas lowest at 4.4%. In order, the five are North Dakota 8.3%, New Mexico 7.1%, Alaska 6.5%, Oklahoma 5.5%, Texas 4.4%. Alaska’s figure comes from a net formula and gets its own section below. The three flagged rows should not be ranked against the rest: West Virginia’s 93% gas share and Louisiana’s 85% mean their quotients mostly measure a gas price assumption, and Wyoming’s total includes coal and mineral severance that this denominator leaves out.

Statutory rate against effective rate in Texas, New Mexico and Oklahoma

Three of the states tax both products on value at a single headline rate, which lets one calculation ask what the statute would raise on the same estimated value if every dollar were taxed at the headline rate. Louisiana joins them below with a caveat. For Texas that is 4.6 percent of oil value plus 7.5 percent of gas value, for New Mexico the 7.14 and 7.94 percent state components, and for Oklahoma 7 percent of both. North Dakota is left out of this comparison because its gas tax is per volume, and Alaska because its base is net.

New Mexico collected 97% of its headline amount, Texas 84% and Oklahoma 79%. The gap is a measurement of distance and not a diagnosis. Several things in the statutes could pull collections below a headline rate: Oklahoma’s 5 percent rate for the first 36 months of new wells, Texas’s exemptions for inactive and orphaned wells and its reduction for high-cost gas, and the other exemptions and reduced rates the texts allow. Others sit in the data itself: gas realized below Henry Hub, the lag between production and payment, and state production estimates that differ from the reports taxpayers file. None of these is sized by a source on this page, and their separate effects cannot be recovered from public aggregates. New Mexico’s near match is partly an artifact of leaving out its ad valorem component, which would push its headline amount higher and the share lower.

Louisiana can be added to the table with a caution. Its gas tax is a rate per thousand cubic feet, so the headline amount needs no gas price. The Department of Revenue set that rate at 9.8 cents for July 2024 to June 2025, the same twelve months as the Census fiscal year, and 3.58 billion Mcf at that rate comes to $350.7 million. Twelve and one-half percent of the $2.02 billion oil value adds $252.1 million, for a statutory amount of $602.8 million against T53 collections of $326.5 million. Because T53 also holds timber, oil and gas collections were no more than that, which is 54% of the headline amount or less. The other three sit between 79% and 97%.

The statute names several reasons for a gap of that size without sizing any of them. Horizontal wells within their 24 months were exempt from 80 percent of the oil tax and all of the gas tax that year. Incapable and stripper wells pay 6.25 and 3.125 percent. Inactive and orphan wells pay reduced oil and gas rates, and gas used as field fuel is outside the tax even though EIA’s marketed volume includes it. Some of the difference may sit in the estimate itself, such as the one-month remittance lag, which Table 4 shows to be small, or in oil first purchase prices that differ from the posted prices the statute allows. Public aggregates cannot split these. What the arithmetic does settle, without any gas price assumption, is that Louisiana’s 12.5 percent is the highest value-based oil rate in Table 2 while collections reached at most 54% of what that rate and the gas rate imply, so the headline rate there says little about what a producer pays.

How much the gas price assumption matters

Table 6 repeats the effective-rate division with gas valued at none, half, three quarters and all of its Henry Hub value, for the five states that have a clean oil-and-gas read. Gas is the soft part of the denominator, so the spread across a row shows how much each state’s result depends on it.

Oklahoma moves the most: its effective rate is 10.3% with no gas value and 5.5% with full Henry Hub value, a swing of 4.8 percentage points, because gas is 46% of its total at full value. Texas moves 1.3 points, from 5.6% to 4.4%. Texas is the lowest of the five in every column of the table. North Dakota is the highest from half of Henry Hub value upward, and with gas valued at nothing it sits at 9.4%, close to its 10 percent oil rate, while Oklahoma at 10.3% would rank first. Wherever the true wellhead gas value falls between zero and Henry Hub, Oklahoma’s placement among the five is the least secure.

Alaska, where the base is net of costs

Alaska’s oil tax is not a percentage of value. Since January 1, 2022 it is 35 percent of the annual production tax value, which for oil is the gross value at the point of production less the producer’s lease expenditures, and a per-barrel credit then reduces the result. For oil from leases north of 68 degrees North latitude that does not receive a reduction in gross value, subsection 024(j) gives a credit of $8 a barrel in a month when the average gross value is under $80 a barrel, and the credit steps down by $1 for each $10 rise in value until it reaches zero at $150. The credit cannot lower the tax below the floor in subsection 011(f), which for North Slope oil is 4 percent of gross value when the average Alaska North Slope price is above $25. Gas produced from 2022 on is taxed at 13 percent of its gross value at the point of production.

Two stylized barrels show how the pieces interact. Suppose a barrel has a gross value of $50 and lease expenditures of $20: 35 percent of the $30 difference is $10.50, the $8 credit brings it to $2.50, and the $2.00 floor is not reached. If lease expenditures were $40, 35 percent of $10 is $3.50, the $8 credit would take it below zero, and the floor of $2.00 sets the tax. The inputs are hypothetical, and the example leaves out carried-forward losses and other credits.

That structure is why Alaska has a collections-over-value figure (6.5%) but no headline-rate comparison. The quotient says what the state took against the first-purchase value of the barrels; it does not say what a producer’s rate was, since the tax can fall when costs rise and the base is net of costs and not the gross. A higher-cost year can lower Alaska’s collections without any change in volume or price.

Three totals that hold more than oil and gas

Wyoming’s chapter 14 taxes coal, oil and gas, trona, bentonite and uranium, and the Census item cannot be split into those streams. Wyoming’s 7.0% therefore overstates the oil-and-gas rate by an unknown amount, and its 6 percent statutory rate is the cleaner reference. West Virginia’s section 11-13A-3 covers coal, limestone and sandstone alongside the gas tax in 11-13A-3a. In the value estimate, 93% of West Virginia’s total is gas valued at a hub price and not at what its producers realized. Louisiana’s R.S. 47:633 begins with timber and pulpwood before it reaches oil, and its gas rate is stated in cents per thousand cubic feet, so the tax on a unit of gas is not a share of the Henry Hub value used in the denominator.

For those reasons the three states stay in Table 1, where the Census totals are what they are, and they appear in Table 4 with a flag in the last column. They are not ranked in the sentences above.

One barrel, one thousand cubic feet

Table 7 applies each state’s headline oil rate to an illustrative barrel priced at $65. It ignores exemptions, credits and the local components outside the state’s severance rate, which is why New Mexico and Wyoming are marked as having additional ad valorem tax. Alaska is left out, since its tax depends on lease costs.

At that price the headline-rate tax ranges from $2.99 in Texas to $8.13 in Louisiana for an older well, and $6.50 in North Dakota. For gas priced at $3.00 a thousand cubic feet, Texas’s 7.5 percent is 22.5 cents, New Mexico’s 7.94 percent state components 23.8 cents, Oklahoma’s 7 percent 21.0 cents, Wyoming’s 6 percent 18.0 cents and West Virginia’s 5 percent 15.0 cents. North Dakota’s and Louisiana’s per-volume rates do not scale with the price, so a price table does not apply to them.

The relationship between price and tax is the practical difference between the structures. A percentage-of-value tax rises and falls with the price, so a higher price pulls more tax out of each barrel and a lower one gives relief. A per-volume gas tax stays put, and Alaska’s net formula moves with costs. The shale breakeven survey shows how operators describe the price they need; each state’s take is one of the line items inside that figure.

Four ways the effective rate blurs the statute

The effective rates above are blunt in four ways. They are built on estimated value and not on reported taxable value, which each state’s revenue department holds. They cover state-government collections, and the file does not show whether the ad valorem taxes in New Mexico’s table or those Wyoming’s statute lays on top are counted in T53, so those two rows may mix state and local components. They average the whole state, mixing wells at reduced early-life rates with older wells. And they rest on a single year in which the prices moved in opposite directions: Texas’s annual first purchase price for oil fell from $75.41 in 2024 to $64.00 in 2025, while the Henry Hub annual average rose from $2.19 to $3.52 per million Btu.

Flared gas is one place the statutes meet other rules. Texas does not tax gas lawfully flared from an oil well, and the flaring by state guide describes North Dakota charging royalties and tax on flared gas after the first year. Collections are rate times price times volume; the volume path for the basin that spans Texas and New Mexico is in the Permian outlook.

For a specific lease or a forecast, use the state’s own rate table and revenue department, and a tax professional for decisions. For the broader picture of who produces how much, start at the US oil production and supply hub, and for what a barrel costs to bring out of the ground, the shale breakeven guide above is the next stop.

Data and sources, all checked November 3, 2026: U.S. Census Bureau, Annual Survey of State Government Tax Collections, 2025 dataset (FY2025 flat file, last revised April 15, 2026), the 2025 methodology and the tax item codes. U.S. Energy Information Administration open-data bulk files for petroleum and natural gas (monthly state crude oil production and first purchase price, state marketed gas production, Henry Hub spot price) and British thermal units. Texas Tax Code chapter 201 and chapter 202. New Mexico Taxation and Revenue Department, oil and gas severance tax filing page, with its 2026-27 rate table and 2024-25 rate table. North Dakota Century Code chapter 57-51 and chapter 57-51.1. Oklahoma Statutes Title 68, section 1001. Alaska Statutes 43.55.011, 43.55.024 and 43.55.160. Wyoming Statutes title 39, chapter 14, sections 203 and 204. West Virginia Code 11-13A-3a and 11-13A-3. Louisiana Revised Statutes 47:633; Louisiana Department of Revenue, Revenue Information Bulletins 24-011 (gas rate, July 2024 to June 2025) and 24-013 (horizontal well exemption, fiscal 2025) and its severance tax gas rate page (updated September 28, 2026). Alaska Department of Revenue Tax Division, oil and gas credits (the per-barrel credit under AS 43.55.024(j)). Effective rates, value estimates, shares and implied amounts are this page’s arithmetic.