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An Act
ENROLLED SENATE
BILL NO. 227 By: Daniels, Paxton, and
Stanley of the Senate
and
Moore, Archer, West
(Tammy), and Bashore of the
House
An Act relating to gross production tax; amending 68
O.S. 2021, Section 1001.1, which relates to property
exempt from ad valorem tax as used in the production
of material subject to gross production tax;
expanding exempt property; updating statutory
references; updating statutory language; and
providing an effective date.
SUBJECT: Gross production tax
BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
SECTION 1. AMENDATORY 68 O.S. 2021, Section 1001.1, is
amended to read as follows:
Section 1001.1. A. The Oklahoma Tax Commission shall adopt
rules and regulations which establish guidelines for the
determination of property exempt from ad valorem taxation pursuant
to the provisions of subsections G K and H L of Section 1001 of this
title. Said Such guidelines shall include, but are not limited to,
the following terms:
1. “Producing leases” means wells or leases or production units
which have had production during any of the previous three (3)
calendar years which is subject to the gross production tax levied
by Section 1001 of this title and which have not been abandoned or
ENR. S. B. NO. 227 Page 2
required to be plugged as required by law on or before January 1 of
the year for which the assessment or valuation is made; and
2. “Payment of gross production tax” means payment of the tax
levied by Section 1001 of this title on production during any of the
three (3) calendar years immediately prior to January 1 of the year
for which the assessment or valuation is made; and.
3. B. Property exempt from ad valorem tax pursuant to the
provisions of subsections G K and H L of Section 1001 of this title
shall include, but is not limited to,:
lease 1. Lease production tanks, lease;
2. Lease production meters,;
3. Flowlines and gathering lines going from the wellhead either
to the first sales meter that is the point of custody transfer or to
the boundary of the production unit, whichever distance is shorter;
and
disposal 4. Disposal systems, including all materials and
equipment of disposal systems and the lines transporting the waste
materials, serving one or more wells, which are not for commercial
purposes. Provided, the exemption shall include the wellbore and
non-recoverable down-hole material, including casing, actually used
in the commercial disposal of waste materials produced with such oil
or gas.
Such exempt property C. The property exempt pursuant to this
section and subsections K and L of Section 1001 of this title shall
remain exempt as long as the property is essential to the production
of oil and gas in commercial quantities. The county assessor shall
be notified when such property becomes nonexempt.
SECTION 2. This act shall become effective January 1, 2027.
ENR. S. B. NO. 227 Page 3
Passed the Senate the 17th day of March, 2026.
Presiding Officer of the Senate
Passed the House of Representatives the 8th 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: _________________________________