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A severance tax is a tax imposed on the removal of non-renewable resources such as crude oil, condensate and natural gas, combed methane and carbon dioxide. Severance tax is charged to producers, or anyone with a working or royalty interest, in oil or gas operations in the imposing states.

Certain oil wells may be except from severance tax based on the amount they produce. Different states have different rules.

Most oil producing US states levy a severance tax on its oil production. The tax is based on either the volume or value of the production. Royalty and mineral owners pay their pro rata share of these oil severance taxes.

The vast majority of law affecting oil and gas production emanates at the state level. Therefore, severance taxes are also legislated and collected by each individual state. States generally base their calculations on the value of the oil produced, the