Oil and gas companies would be allowed to subtract intangible drilling and development costs when calculating the corporate alternative minimum tax based on adjusted financial statement income. The change lets these firms deduct drilling expenses for the 15% minimum tax in the same way they already deduct them for regular income tax. The provision applies to taxable years beginning after December 31, 2025. No other parts of the corporate minimum tax are altered.
Corporate Benefits
- Corporate alternative minimum tax — Lowered for oil and gas firms via intangible-drilling cost deduction
Environmental Concerns
- Fossil-fuel tax preference — Drilling costs now deductible against the 15% corporate minimum tax
Congressional Summary
Promoting Domestic Energy Production ActThis bill allows corporations to reduce their adjusted financial statement income to account for certain intangible costs related to oil, gas, or geothermal well drilling and development for purposes of calculating the corporate alternative minimum tax.Under current law, a 15% corporate alternative minimum tax is imposed on a corporation with adjusted financial statement income exceeding an average of $1 billion for a consecutive three-year period (or an average of $100 million for a U.S. corporation that is part of a foreign parent multinational group if the adjusted financial statement income of such group exceeds an average of $1 billion for a consecutive three-year period). Adjusted financial statement income generally is the net income or loss reported on the corporation’s applicable financial statement for a tax year, with adjustments for specific items. This bill expands the reductions that may be made to a corporation’s adjusted financial statement income to include (1) intangible drilling and development costs incurred by an operator of a domestic oil, gas, or geothermal well that are allowed as a deduction in the current tax year when computing regular taxable income; and (2) any depletion expenses related to the intangible oil, gas, or geothermal well drilling and development costs.
Details
- Congress
- 119th
- Chamber
- House
- Status
- summarized
- Action
- Introduced in House
- Action Date
- 2025-01-23
- Date Added
- 2026-05-19
- Source
- Congress.gov →
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