SB 706 West Virginia Senate · 2026 Regular Session

Modifying severance tax on newly drilled oil and natural gas wells

SB 706 modifies West Virginia's severance tax for oil and natural gas producers by temporarily reducing the tax rate for newly drilled wells. It lowers the tax rate to 3% (from 5%) for 24 months starting from the first sale of natural gas or oil from wells drilled after June 30, 2026. This applies specifically to newly completed wells, while existing wells and other production types maintain their standard rates (2.5% or 5% depending on production volume and drilling method). The bill directly affects oil and gas producers who drill new wells after the effective date, offering a short-term tax incentive to encourage new development. The change is part of the state's severance tax structure under §11-13A-3a of the West Virginia Code.

Bill status in committee 1 of 4 stages cleared

Introduction

Feb 2026

Committee Review

Floor Vote

Governor

Introduced Feb 2, 2026 Last action Feb 10, 2026

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What changed between versions

Introduced Version → Committee Substitute · 5 edits

MODERATE

The bill was amended to add a new section (§11-13A-5a) that temporarily modifies how severance tax revenue is shared with counties and municipalities for newly drilled wells. It also updated the tax rate for new wells to 3.25% (down from 5%) for the first 24 months of production and clarified that a well is considered 'new' once it is hydraulically fractured. Additionally, the tax rate for mid-volume production was slightly adjusted from 2.5% to 2.52%.

Scope change

The bill's scope expanded to include temporary changes to the distribution of severance tax funds to local governments and new definitions regarding when a well is considered 'new' for tax purposes.

FISCAL

Added a new provision (§11-13A-5a) that temporarily increases the share of severance tax revenue going to counties and municipalities for new wells from 10% to 15.5% for the first 24 months of production.

TIMELINE

Changed the duration of the reduced tax rate for new wells from 24 consecutive production months to 24 consecutive months calculated from the date of first sale.

DEFINITION

Added a specific definition stating that a well is considered 'drilled and completed' when it is hydraulically fractured.

REQUIREMENT

Adjusted the tax rate for mid-volume production (between 5,000 and 60,000 cubic feet of gas or 0.5 to 10 barrels of oil) from 2.5% to 2.52%.

TECHNICAL

Corrected grammatical errors and formatting inconsistencies in the original text, such as redundant words and inconsistent punctuation.

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Full legislative history

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Committee

Feb 10, 2026

Committee

To Finance

upper

Feb 10, 2026

Committee

Committee substitute reported, but first to Finance

upper

Feb 2, 2026

Introduced

Introduced in Senate

upper

1 primary · 1 co-sponsor