Natural Gas Production Tax

For monthly filers, reports are due on the 20th day of the 2nd month following the production month (for example, April 20 for February activity).

For yearly filers, if qualified, reports are due on February 20 for the preceding year..

• If tax is paid 1-30 days after the due date, a 5 percent penalty is assessed.
• If tax is paid over 30 days after the due date, a 10 percent penalty is assessed.

• Past due taxes are charged interest beginning 61 days after the due date.
• To calculate interest on past due taxes, visit Interest Owed and Earned.

Select one of these reporting methods:

• Electronic Data Interchange (EDI)
• Tax Forms

Select one of these payment methods:

• Web Electronic Funds Transfer (EFT) or credit card via Webfile (American Express, Discover, Mastercard and Visa)
• Electronic Data Interchange (EDI)
• TEXNET
• Check

Select one of these reporting methods:

• Electronic Data Interchange (EDI)
• Tax Forms

Select one of these payment methods:

• Web Electronic Funds Transfer (EFT) or credit card via Webfile (American Express, Discover, Mastercard and Visa)
• Electronic Data Interchange (EDI)
• TEXNET

Electronic Data Interchange (EDI) is the only available reporting method.

Select one of these payment methods:

• Web Electronic Funds Transfer (EFT) or credit card via Webfile (American Express, Discover, Mastercard and Visa)
• Electronic Data Interchange (EDI)
• TEXNET

Electronic Data Interchange (EDI) is the only available reporting method.

Select one of these payment methods:

• Electronic Data Interchange (EDI)
• TEXNET

Get instructions and examples for reporting a low-producing well exemption.

A reduced tax rate can apply if a well qualifies for an exemption that was certified by the Texas Railroad Commission. Certified exemptions and their reduced tax rates are:

• Two-Year Inactive Well Exemption – Tax rate of 0.0 percent (.000) of market value of casinghead gas produced from an oil well applies.
• High-Cost Gas Reduced Tax Rate – Tax rate of 0.0 percent to 7.4 percent (.000 to .074) of the market value of gas produced from a gas well applies. The tax rate varies by well depending on how the well’s drilling and completion costs compare to the median cost of all high cost gas wells from the previous state fiscal year (Sept. 1 – Aug. 31).
• Flared Gas Exemption – Tax rate of 0.0 percent (.000) of market value of casinghead gas produced from an oil well applies.

When an oil or gas well qualifies for multiple severance tax incentives, a taxpayer can choose which incentive is most favorable. For example, some gas wells now qualify for the low-producing well and high-cost gas tax incentives at the same time. Depending on the average price of gas, the low-producing well tax incentive can be lower than the high-cost gas reduced tax rate. Other months, the high-cost gas incentive might be more favorable.

A taxpayer can choose the tax incentive that has a lower tax rate for a gas well for each individual report period, but cannot report both for the same gas well for the same report period.