The gross production tax, or severance tax, is a value-based tax levied at a basic rate of 7 percent upon the production of oil and gas in Oklahoma. Under legislation approved in the 2017 special session (HB 1010xx), oil and gas from newly-spudded wells will be taxed at 5 percent for the first 36 months of production effective June 27, 2018. Previously, new production was being taxed at 2 percent for 36 months. One percent of gross production tax revenues is divided between counties and school districts, with the remainder going to the state.
In 2017, the state collected $191.7 million from the gross production tax on gas and $219.6 from oil; together, gross production taxes accounted for 4.7 percent of total tax revenues and were the fifth largest revenue source after the personal income tax, sales tax, motor vehicle tax and motor fuel taxes.