The Oklahoma Gross Production Tax is an alternative to property tax that is applied to the production of natural gas and oil in the state. Unlike property tax, which is typically levied on oil and gas wells, Oklahoma imposes the Gross Production Tax as a value-based tax. The tax rate for this tax is 7 percent.
In the past, new wells were subject to a lower tax rate of 2 percent for the first 36 months. However, a change in legislation during the 2017 session (HB1010xx) increased the tax rate to 5 percent for the first 36 months. After the initial 36-month period, the normal tax rate of 7 percent applies. This change became effective on June 27, 2018.
The revenue generated from the Gross Production Tax is significant. In 2017, Oklahoma collected $191.8 million from the tax on gas production and $219.6 million from oil production. These figures indicate that the Gross Production Tax accounted for over 4.7 percent of the state’s total tax revenues.
To ensure compliance with the tax, the first purchaser of the minerals is responsible for paying the Oklahoma Gross Production Tax monthly to the Oklahoma Tax Commission. The tax amount is withheld from the payment made to the owner of the mineral rights.
It’s worth noting that the information provided is accurate up to my knowledge cutoff in September 2021. For the most up-to-date and detailed information regarding the Oklahoma Gross Production Tax, it’s recommended to consult the official sources or contact the Oklahoma Tax Commission.