May 20, 2026
Mr. Marshall (for himself, Mr. Cassidy, and Mr. Moran) introduced the following bill; which was read twice and referred to the Committee on Finance
To amend the Internal Revenue Code of 1986 to modify certain percentage depletion rules with respect to oil and gas wells.
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,
Section 1. Short title
This Act may be cited as the Protecting America’s Small Oil and Gas Producers and Rural Jobs Act
.
Sec. 2. Modification of certain percentage depletion rules with respect to oil and gas wells
(a) Percentage depletion rate calculation modified with respect to marginal properties
Section 613A(c)(6)(C) of the Internal Revenue Code of 1986 is amended to read as follows:
(C) Applicable percentage
(i) In general
For purposes of subparagraph (A), the term applicable percentage means the percentage (not greater than 25 percent) equal to the sum of—
(I)
15 percent, plus
(II)
1 percentage point for each whole dollar by which $70 exceeds the reference price for crude oil for the calendar year preceding the calendar year in which the taxable year begins.
For purposes of this paragraph, the term reference price means, with respect to any calendar year, the reference price determined for such calendar year under section 45K(d)(2)(C).
(ii) PPI adjustment
(I) In general
In the case of any taxable year beginning in a calendar year after 2027, the $70 amount in clause (i)(II) shall be increased by an amount equal to—
(aa)
such dollar amount, multiplied by
(bb)
the PPI adjustment factor for such calendar year.
(II) PPI adjustment factor
For purposes of subclause (I), the PPI adjustment factor for any calendar year is the percentage (if any) by which—
(aa)
the PPI for the preceding calendar year, exceeds
(bb)
the PPI for calendar year 2026.
(III) PPI for any calendar year
For purposes of subclause (II), the PPI for any calendar year is the average of the Producer Price Index for Drilling Oil and Gas Wells, as published by the Bureau of Labor Statistics of the Department of Labor, as of the close of the 12-month period ending on August 31 of such calendar year.
(b) Nonapplication of taxable income limitation with respect to marginal properties
Section 613A(c)(6) of such Code is amended by adding at the end the following new subparagraph:
(H) Nonapplication of taxable income limitation
With respect to so much of the allowance for depletion as is determined under subparagraph (A)—
(i)
subsection (d)(1) shall not apply, and
(ii)
the second sentence of subsection (a) of section 613 shall not apply.
(c) Depletable oil quantity calculation modified
Section 613A(c)(3)(B) of such Code is amended by striking 1,000 barrels
and inserting 2,000 barrels
.
(d) Effective date
The amendments made by this section shall apply to taxable years beginning after December 31, 2026.