Texas House bill by Rep. Darby exempts certain hydrocarbons from severance tax

Passed bill authored by State Rep. Drew Darby aims to exempt hydrocarbons produced from certified restimulation wells from severance taxes, seeking to support oil production while setting limits and enforcement measures, according to the Texas Legislature website.

In the House, 38 Democrats and 77 Republicans voted in favor of the bill, while 20 Democrats and three Republicans opposed it.

Meanwhile, in the Senate, nine Democrats and 20 Republicans voted in favor, while two Democrats voted against it.

Drew Darby introduced the bill in the Texas House on Friday, Feb. 21, during the 89th regular legislative session.

Darby, a Republican, was elected to the Texas State House in 2007 to represent the state’s 72nd House district, replacing previous state representative Scott Edward Campbell.

According to the Texas Legislature, the bill’s official text was summarized as follows: ‘Relating to a severance tax exemption for oil and gas produced from certain previously inactive restimulation wells; providing a civil penalty’.

The following is our breakdown, based on the actual bill text, and may include interpretation to clarify its provisions.

In essence, this bill introduces a severance tax exemption for hydrocarbons produced from restimulation wells in Texas, effective Jan. 1, 2026. A qualifying well, as certified by the Railroad Commission of Texas, can be exempt from certain taxes for up to 36 months or until the taxes saved reach the lesser of $750,000 or restimulation costs. It excludes wells with under 60 months of production, those in enhanced oil recovery projects, and uncompleted wells. Operators must apply with the commission and comptroller for certification and exemption. The bill includes penalties for false information and improper exemption claims, with civil penalties enforced by the attorney general in Travis County.

The bill received its final legislative approval on Monday, May 26, and was signed into law by Gov. Greg Abbott on Friday, June 20.

Bills in Texas go through a multi-step legislative process, including committee review, debates, and votes in both chambers before reaching a final decision. Each session, there are typically thousands of bills introduced, but only a portion successfully navigate the process to become law.

You can read more about the bills and other measures here.