US oil and gas companies are potentially subject to state and local taxation. Oil, gas, and other natural resource tax rates vary by state and possibly other political subdivisions such as counties, cities, and municipalities. One common type of tax that states impose on oil and gas companies is severance tax. Severance taxes are imposed on the extraction, production, and sale of non-renewable resources to compensate for the severance (loss) of the resource from the earth’s surface. Although not exhaustive, this document summarizes state severance tax rates and other fees related to the oil and gas industry.
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