Promoting Domestic Energy Production Act

Bill Number: H.R. 662
Origin Chamber: House
Congress: 119th Congress, Session 1
Policy Area: Taxation
Status: Introduced
Latest Action: 2025-01-23: Referred to the House Committee on Ways and Means.
Last Updated: 2026-05-18T14:08:19Z

AI-Generated Summary

Purpose

The "Promoting Domestic Energy Production Act" (H.R. 662) aims to support the U.S. oil and gas industry by adjusting tax rules. It allows certain costs related to drilling and developing oil and gas wells—known as intangible drilling and development costs (IDCs)—to be deducted when calculating "adjusted financial statement income" (AFSI). AFSI is a measure used to determine a company's liability under the Corporate Alternative Minimum Tax (CAMT), a backup tax introduced in 2022 to ensure large corporations pay a minimum amount of tax regardless of other deductions.

Key Provisions

Amendment to Tax Code Section: The bill modifies Section 56A(c)(13) of the Internal Revenue Code of 1986, which governs AFSI calculations for CAMT purposes.
It updates the rules for reducing AFSI by including deductions for:
Depreciation (wear and tear on assets) under Sections 167 and 168, limited to the amount allowed in regular taxable income.
IDCs under Section 263(c), also limited to the amount allowed in regular taxable income. IDCs are non-physical costs like labor or site preparation for wells that can typically be expensed immediately rather than capitalized over time.
It requires ignoring (disregarding) certain depreciation and depletion (resource extraction) expenses recorded on a company's financial statements when they relate to IDCs or depreciable property.
Effective Date: Changes apply to tax years starting after December 31, 2025.

Significant Changes to Existing Law

Under current law, IDCs are fully deductible for regular income tax purposes but may not be fully accounted for in AFSI calculations, potentially increasing a company's CAMT liability by treating these costs less favorably.
This bill aligns AFSI treatment more closely with regular tax deductions for IDCs and depreciation, preventing these expenses from being "added back" or partially disallowed in the CAMT computation. This reduces discrepancies between book income (financial statements) and taxable income.

Potential Impacts

On Government Agencies: The Internal Revenue Service (IRS) will need to update guidance and forms for CAMT filings, but the change is narrow and technical, likely requiring minimal administrative overhaul. It could lead to lower federal tax revenue from large energy corporations, estimated in the billions over time depending on industry activity.
On Citizens: Indirect benefits for consumers through potential increases in domestic oil and gas production, which could stabilize or lower energy prices and create jobs in energy-dependent regions. However, it may not directly affect individual taxpayers.
On International Relations: By encouraging U.S. energy production, the bill could enhance energy independence, reducing reliance on foreign oil imports and strengthening the U.S. position in global energy markets.

Main Stakeholders Affected

Oil and Gas Companies: Primary beneficiaries, especially large corporations subject to CAMT (those with average annual AFSI over $1 billion). They will face lower effective tax rates on IDC-heavy operations, improving cash flow for exploration and drilling.
Energy Industry Workers and Communities: Positive effects in states with significant drilling activity (e.g., Texas, Pennsylvania, Oklahoma), potentially boosting employment and local economies.
Federal Government: Loses revenue, which could impact funding for public programs.
Environmental Groups: Potentially opposed, as it incentivizes fossil fuel extraction without corresponding green energy provisions.

Notable Legal, Constitutional, or Political Implications

Legal: The change is a targeted tax adjustment within the existing CAMT framework, unlikely to face constitutional challenges as it treats industries equally under tax law. It reinforces the IRS's authority to interpret financial statement adjustments but may invite future litigation if companies dispute IDC classifications.
Constitutional: No direct implications; tax policy falls under Congress's broad taxing power (Article I, Section 8).
Political: Introduced by a bipartisan group of 30+ representatives, many from energy-producing districts, signaling support for fossil fuels amid debates on energy security and climate policy. It could influence broader tax reform discussions, highlighting tensions between promoting domestic production and revenue neutrality in post-2022 tax laws.

This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.

Sponsor

Rep. Carey, Mike [R-OH-15]

Cosponsors (43)

Rep. Gonzalez, Vicente [D-TX-34], Rep. Langworthy, Nicholas A. [R-NY-23], Rep. Rulli, Michael A. [R-OH-6], Rep. Davidson, Warren [R-OH-8], Rep. Crenshaw, Dan [R-TX-2], Rep. Zinke, Ryan K. [R-MT-1], Rep. Balderson, Troy [R-OH-12], Rep. Veasey, Marc A. [D-TX-33], Rep. LaHood, Darin [R-IL-16], Rep. Carter, John R. [R-TX-31], Rep. Meuser, Daniel [R-PA-9], Rep. Thompson, Glenn [R-PA-15], Rep. Miller, Mary E. [R-IL-15], Rep. Hern, Kevin [R-OK-1], Rep. Tenney, Claudia [R-NY-24], Rep. Miller, Carol D. [R-WV-1], Rep. Williams, Roger [R-TX-25], Rep. Cuellar, Henry [D-TX-28], Rep. Hunt, Wesley [R-TX-38], Rep. Mann, Tracey [R-KS-1], Rep. Miller, Max L. [R-OH-7], Rep. Cole, Tom [R-OK-4], Rep. Weber, Randy K. Sr. [R-TX-14], Rep. Newhouse, Dan [R-WA-4], Rep. McDowell, Addison [R-NC-6], Rep. Fallon, Pat [R-TX-4], Rep. Van Duyne, Beth [R-TX-24], Rep. Murphy, Gregory F. [R-NC-3], Rep. Ellzey, Jake [R-TX-6], Rep. Babin, Brian [R-TX-36], Rep. Evans, Gabe [R-CO-8], Rep. Goldman, Craig [R-TX-12], Rep. Malliotakis, Nicole [R-NY-11], Rep. Estes, Ron [R-KS-4], Rep. Amodei, Mark E. [R-NV-2], Rep. Lawler, Michael [R-NY-17], Rep. Mills, Cory [R-FL-7], Rep. Steube, W. Gregory [R-FL-17], Rep. Pfluger, August [R-TX-11], Rep. Bice, Stephanie I. [R-OK-5], Rep. Latta, Robert E. [R-OH-5], Rep. Taylor, David [R-OH-2], Rep. Moran, Nathaniel [R-TX-1]

Recent Actions

2025-01-23: Referred to the House Committee on Ways and Means.
2025-01-23: Introduced in House
2025-01-23: Introduced in House

Bill Versions

Promoting Domestic Energy Production Act — issued 2025-01-23 — PDF (3 pages)