Protecting America’s Small Oil and Gas Producers and Rural Jobs Act

This bill modifies tax rules to provide financial incentives for small oil and gas producers operating in marginal or low-production areas. It changes how the percentage depletion tax deduction is calculated, allowing a higher deduction rate based on oil prices and adjusting that rate annually using an inflation measure called the Producer Price Index. The legislation also removes certain income limits that restrict how much of this tax benefit producers can claim and doubles the minimum oil production threshold from 1,000 to 2,000 barrels to qualify for the deduction. These tax changes would take effect for taxable years beginning after December 31, 2026, primarily affecting independent oil and gas companies and rural communities dependent on these industries.