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An Act
ENROLLED SENATE
BILL NO. 1280 By: Bergstrom of the Senate
and
Kendrix of the House
An Act relating to excise tax; amending 68 O.S. 2021,
Sections 1101, 1102, and 1103, which relate to the
additional tax on oil and gas; extending sunset of
tax rate and apportionment; updating statutory
language; providing an effective date; and declaring
an emergency.
SUBJECT: Excise tax
BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
SECTION 1. AMENDATORY 68 O.S. 2021, Section 1101, is
amended to read as follows:
Section 1101. A. Prior to July 1, 2026 2031, and as provided
in Section 1103.1 of this title, there is hereby levied, in addition
to the gross production tax, an excise tax equal to ninety-five one
thousandths of one percent (.095 of 1%) of the gross value on each
barrel of petroleum oil produced in this state which is subject to
gross production tax in this state. Such excise tax of ninety-five
one thousandths of one percent (.095 of 1%) of the gross value shall
be reported to and collected by the Oklahoma Tax Commission at the
same time and in the same manner as is provided by law for the
collection of gross production tax on petroleum oil. On petroleum
oil sold at the time of production, the excise tax thereon shall be
paid by the purchaser, who is hereby authorized to deduct in making
settlement with the producer and/or royalty owner the amount of tax
so paid; provided, that in the event oil on which such tax becomes
due is not sold at the time of production, but is retained by the
producer, the tax on such oil not so sold shall be paid by the
producer including the tax due on royalty oil not sold; and
ENR. S. B. NO. 1280 Page 2
provided, further, that in settlement with the royalty owner, such
producer shall have the right to deduct the amount of tax so paid on
royalty oil, or to deduct therefrom royalty oil equivalent in value
at the time such tax becomes due with the amount of tax paid.
The provisions of this subsection shall terminate on June 30,
2026 2031.
B. Beginning on July 1, 2026 2031, there is hereby levied, in
addition to the gross production tax, an excise tax equal to eighty-
five one thousandths of one percent (.085 of 1%) of the gross value
on each barrel of petroleum oil produced in this state which is
subject to gross production tax in this state. Such excise tax of
eighty-five one thousandths of one percent (.085 of 1%) of the gross
value shall be reported to and collected by the Tax Commission at
the same time and in the same manner as is provided by law for the
collection of gross production tax on petroleum oil. On petroleum
oil sold at the time of production, the excise tax thereon shall be
paid by the purchaser, who is hereby authorized to deduct in making
settlement with the producer and/or royalty owner the amount of tax
so paid; provided, that in the event oil on which such tax becomes
due is not sold at the time of production, but is retained by the
producer, the tax on such oil not so sold shall be paid by the
producer including the tax due on royalty oil not sold; and
provided, further, that in settlement with the royalty owner, such
producer shall have the right to deduct the amount of tax so paid on
royalty oil, or to deduct therefrom royalty oil equivalent in value
at the time such tax becomes due with the amount of tax paid.
SECTION 2. AMENDATORY 68 O.S. 2021, Section 1102, is
amended to read as follows:
Section 1102. A. Prior to July 1, 2026 2031, and as provided
in Section 1103.1 of this title, there is hereby levied, in addition
to the gross production tax, an excise tax equal to ninety-five one
thousandths of one percent (.095 of 1%) of the gross value of all
natural gas and/or casinghead gas produced in this state which is
subject to gross production tax in this state. Such excise tax of
ninety-five one thousandths of one percent (.095 of 1%) of the gross
value shall be reported to and collected by the Oklahoma Tax
Commission at the same time and in the same manner as is provided by
law for the collection of gross production tax on natural gas and/or
ENR. S. B. NO. 1280 Page 3
casinghead gas, and this excise tax shall apply in all cases where
the gross production tax provided for by law applies to the
production of natural gas and/or casinghead gas. The excise tax
shall be paid by the purchaser, who is hereby authorized to deduct
in making settlement with the producer and/or royalty owner the
amount of tax so paid; provided, however, that if such natural gas
and/or casinghead gas is retained by the producer, then the tax
shall be paid by the producer, who shall have the right to deduct
the amount of tax so paid on royalty gas at the time of settlement
with the royalty owner.
The provisions of this subsection shall terminate on June 30,
2026 2031.
B. Beginning on July 1, 2026 2031, there is hereby levied, in
addition to the gross production tax, an excise tax equal to eighty-
five one thousandths of one percent (.085 of 1%) of the gross value
of all natural gas and/or casinghead gas produced in this state
which is subject to gross production tax in this state. Such excise
tax of eighty-five one thousandths of one percent (.085 of 1%) of
the gross value shall be reported to and collected by the Tax
Commission at the same time and in the same manner as is provided by
law for the collection of gross production tax on natural gas and/or
casinghead gas, and this excise tax shall apply in all cases where
the gross production tax provided for by law applies to the
production of natural gas and/or casinghead gas. The excise tax
shall be paid by the purchaser, who is hereby authorized to deduct
in making settlement with the producer and/or royalty owner the
amount of tax so paid; provided, however, that if such natural gas
and/or casinghead gas is retained by the producer, then the tax
shall be paid by the producer, who shall have the right to deduct
the amount of tax so paid on royalty gas at the time of settlement
with the royalty owner.
SECTION 3. AMENDATORY 68 O.S. 2021, Section 1103, is
amended to read as follows:
Section 1103. A. 1. Prior to July 1, 2026 2031, and as
provided in Section 1103.1 of this title, all monies derived from
the levy of the excise tax on petroleum oil provided for by Section
1101 of this title shall be deposited with the State Treasurer, who
shall credit and apportion the same as follows:
ENR. S. B. NO. 1280 Page 4
a. eighty-two and six hundred thirty-four thousandths
percent (82.634%) of said the excise tax shall be
credited to the General Revenue Fund of the State
Treasury; provided, in each fiscal year beginning on
or after July 1, 2013, the first One Million Three
Hundred Fifty Thousand Dollars ($1,350,000.00) which
would otherwise have been apportioned to the General
Revenue Fund pursuant to this subparagraph shall be
transferred to the Oil and Gas Division Revolving Fund
of the Oklahoma Corporation Commission,
b. ten and five hundred twenty-six thousandths percent
(10.526%) shall be credited and apportioned to a
separate and distinct fund to be known as the
“Corporation Commission Plugging Fund”, and
c. the remaining six and eighty-four hundredths percent
(6.84%) of said the excise tax shall be credited and
apportioned to a separate and distinct fund to be
known as “The Interstate Oil Compact Fund of
Oklahoma”, which fund is hereby created.
2. Prior to July 1, 2026 2031, and as provided in Section
1103.1 of this title, all monies derived from the levy of the excise
tax on natural gas and/or casinghead gas provided for by Section
1102 of this title shall be deposited with the State Treasurer, who
shall credit and apportion the same as follows:
a. eighty-two and six thousand forty-five ten thousandths
percent (82.6045%) of said the excise tax shall be
credited to the General Revenue Fund of the State
Treasury; provided, in each fiscal year beginning on
or after July 1, 2013, the first One Million Three
Hundred Fifty Thousand Dollars ($1,350,000.00) which
would otherwise have been apportioned to the General
Revenue Fund pursuant to this subparagraph shall be
transferred to the Oil and Gas Division Revolving Fund
of the Oklahoma Corporation Commission,
b. ten and five thousand five hundred fifty-five ten
thousandths percent (10.5555%) shall be credited and
ENR. S. B. NO. 1280 Page 5
apportioned to the Corporation Commission Plugging
Fund, and
c. six and eighty-four hundredths percent (6.84%) of said
the excise tax shall be credited and apportioned to
The Interstate Oil Compact Fund of Oklahoma.
3. Prior to July 1, 2026 2031, and as provided in Section
1103.1 of this title, all monies to accrue to The Interstate Oil
Compact Fund of Oklahoma under the provisions of this article,
together with all monies remaining unexpended in The Interstate Oil
Compact Fund of Oklahoma created under this subsection, are hereby
appropriated and shall be used for the payment of the compensation
of the assistant representative of the State of Oklahoma on The
Interstate Oil Compact Commission, the compensation of such
clerical, technical and legal assistants as he or she may with the
consent of the Governor employ; the actual and necessary traveling
expenses of the assistant representative and employees, and of the
Governor when traveling in the Governor’s capacity as official
representative of the State of Oklahoma on The Interstate Oil
Compact Commission; all items of office expense including the cost
of office supplies and equipment; such contributions as the Governor
shall deem necessary and proper to pay to The Interstate Oil Compact
Commission to defray its expenses; and such other necessary expenses
as may be incurred in enabling the State of Oklahoma to fully
cooperate in accomplishing the objects of the Interstate Compact to
conserve oil and gas. The fund shall be disbursed by the State
Treasurer upon sworn, itemized claims approved by the assistant
representative and the Governor; provided, that if at the end of any
fiscal year any part of the special fund shall remain unexpended,
such balance shall be transferred by the State Treasurer to, and
become a part of, the General Revenue Fund of the state for the
ensuing fiscal year. Provided, further, that if the State of
Oklahoma withdraws from the Interstate Compact to conserve oil and
gas, any unencumbered monies in The Interstate Oil Compact Fund of
Oklahoma shall be transferred to and become a part of the General
Revenue Fund of the State Treasury and thereafter the excise tax on
petroleum oil, natural gas and/or casinghead gas levied by this
article shall be levied, collected and deposited in the General
Revenue Fund of the State Treasury.
ENR. S. B. NO. 1280 Page 6
4. All monies to accrue to the Corporation Commission Plugging
Fund are hereby appropriated and shall be used for payment of
expenses related to the statutory purpose of the fund.
The provisions of this subsection shall terminate on June 30,
2026 2031.
B. 1. Beginning on July 1, 2026 2031, all monies derived from
the levy of the excise tax on petroleum oil provided for by Section
1101 of this title shall be deposited with the State Treasurer, who
shall credit and apportion the same as follows:
a. ninety-two and thirty-five hundredths percent (92.35%)
of said the excise tax shall be credited and
apportioned to the General Revenue Fund of the State
Treasury; provided, in each fiscal year beginning on
or after July 1, 2013, the first One Million Three
Hundred Fifty Thousand Dollars ($1,350,000.00) which
would otherwise have been apportioned to the General
Revenue Fund pursuant to this subparagraph shall be
transferred to the Oil and Gas Division Revolving Fund
of the Oklahoma Corporation Commission, and
b. the remaining seven and sixty-five hundredths percent
(7.65%) of said the excise tax shall be credited and
apportioned to a separate and distinct fund to be
known as “The Interstate Oil Compact Fund of
Oklahoma”, which fund is hereby created.
2. Beginning on July 1, 2026 2031, all monies derived from the
levy of the excise tax on natural gas and/or casinghead gas provided
for by Section 1102 of this title shall be deposited with the State
Treasurer, who shall credit and apportion the same as follows:
a. ninety-two and thirty-five hundredths percent (92.35%)
of said the excise tax shall be credited and
apportioned to the General Revenue Fund of the State
Treasury; provided, in each fiscal year beginning on
or after July 1, 2013, the first One Million Three
Hundred Fifty Thousand Dollars ($1,350,000.00) which
would otherwise have been apportioned to the General
Revenue Fund pursuant to this subparagraph shall be
ENR. S. B. NO. 1280 Page 7
transferred to the Oil and Gas Division Revolving Fund
of the Oklahoma Corporation Commission, and
b. seven and sixty-five hundredths percent (7.65%) of
said the excise tax shall be credited and apportioned
to The Interstate Oil Compact Fund of Oklahoma.
3. Beginning on July 1, 2026 2031, all monies to accrue to The
Interstate Oil Compact Fund of Oklahoma under the provisions of this
article, together with all monies remaining unexpended in The
Interstate Oil Compact Fund of Oklahoma created under this
subsection, are hereby appropriated and shall be used for the
payment of the compensation of the assistant representative of the
State of Oklahoma on The Interstate Oil Compact Commission, the
compensation of such clerical, technical and legal assistants as he
or she may with the consent of the Governor employ; the actual and
necessary traveling expenses of the assistant representative and
employees, and of the Governor when traveling in the Governor’s
capacity as official representative of the State of Oklahoma on The
Interstate Oil Compact Commission; all items of office expense
including the cost of office supplies and equipment; such
contributions as the Governor shall deem necessary and proper to pay
to The Interstate Oil Compact Commission to defray its expenses; and
such other necessary expenses as may be incurred in enabling the
State of Oklahoma to fully cooperate in accomplishing the objects of
the Interstate Compact to conserve oil and gas. The fund shall be
disbursed by the State Treasurer upon sworn, itemized claims
approved by the assistant representative and the Governor; provided,
that if at the end of any fiscal year any part of the special fund
shall remain unexpended, such balance shall be transferred by the
State Treasurer to, and become a part of, the General Revenue Fund
of the State Treasury for the ensuing fiscal year. Provided,
further, that if the State of Oklahoma withdraws from the Interstate
Compact to conserve oil and gas, any unencumbered monies in The
Interstate Oil Compact Fund of Oklahoma shall be transferred to and
become a part of the General Revenue Fund of the State Treasury and
thereafter the excise tax on petroleum oil, natural gas and/or
casinghead gas levied by this article shall be levied, collected and
deposited in the General Revenue Fund of the State Treasury.
SECTION 4. This act shall become effective July 1, 2026.
ENR. S. B. NO. 1280 Page 8
SECTION 5. It being immediately necessary for the preservation
of the public peace, health or safety, an emergency is hereby
declared to exist, by reason whereof this act shall take effect and
be in full force from and after its passage and approval.
ENR. S. B. NO. 1280 Page 9
Passed the Senate the 10th day of March, 2026.
Presiding Officer of the Senate
Passed the House of Representatives the 29th day of April, 2026.
Presiding Officer of the House
of Representatives
OFFICE OF THE GOVERNOR
Received by the Office of the Governor this ____________________
day of ___________________, 20_______, at _______ o'clock _______ M.
By: _________________________________
Approved by the Governor of the State of Oklahoma this _________
day of ___________________, 20_______, at _______ o'clock _______ M.
_________________________________
Governor of the State of Oklahoma
OFFICE OF THE SECRETARY OF STATE
Received by the Office of the Secretary of State this __________
day of __________________, 20 _______, at _______ o'clock _______ M.
By: _________________________________