Modifies percentage depletion rules for oil and gas wells to benefit small producers.

The bill amends the Internal Revenue Code to adjust the percentage depletion rules for oil and gas wells. It increases the $70 amount based on the Producer Price Index (PPI) for drilling oil and gas wells. The bill also modifies the applicable percentage for depletion, exempts certain depletion from taxable income limitations, and doubles the depletable oil quantity from 1,000 to 2,000 barrels. These changes apply to taxable years beginning after December 31, 2026.

Modifies percentage depletion rules for oil and gas wells to benefit small producers.

The bill amends the Internal Revenue Code to adjust the percentage depletion rules for oil and gas wells. It increases the $70 amount based on the Producer Price Index (PPI) for drilling oil and gas wells. The bill also modifies the applicable percentage for depletion, exempts certain depletion from taxable income limitations, and doubles the depletable oil quantity from 1,000 to 2,000 barrels. These changes apply to taxable years beginning after December 31, 2026.