Big Oil Windfall Profits Tax Act
- Bill Number
- H.R. 7960
- Origin Chamber
- House
- Congress
- 119th Congress, Session 2
- Policy Area
- Taxation
- Status
- Introduced
- Latest Action
- 2026-03-17: Referred to the House Committee on Ways and Means.
- Last Updated
- 2026-07-03T08:06:34Z
AI-Generated Summary
Purpose
The "Big Oil Windfall Profits Tax Act" (H.R. 7960) aims to impose an excise tax—called a "windfall profits tax"—on crude oil extracted or imported by large oil companies when oil prices exceed a baseline level. It rebates the collected tax revenues directly to individual taxpayers as a refundable credit to help offset gasoline price increases.
Key Provisions
- Windfall Profits Tax (New IRC Section 5896):
- Applies to "covered taxpayers": companies averaging over 300,000 barrels per day of crude oil extraction and imports in 2025 or in the current quarter (aggregation rules treat related entities as one).
- Taxed items: Each barrel (42 US gallons) of taxable crude oil (including condensates and natural gasoline) extracted in the US and removed, or imported for use/warehousing.
- Tax rate: 50% of the excess average Brent crude oil price for the quarter over the 2025 annual average (adjusted for inflation after 2026 using cost-of-living index).
- Effective for oil removed/entered after December 31, 2025; payments delayed for early 2026 quarters.
- Gasoline Price Rebates (New IRC Section 6436):
- Refundable tax credit for "eligible individuals" (US residents not nonresident aliens, dependents, estates, or trusts).
- Amount: Total rebates divided equally among eligible individuals per quarter, based on revenues in the "Protect Consumers from Gas Hikes Fund"; 150% for joint filers.
- Phase-out: Reduced by 5% of adjusted gross income (AGI) over $75,000 ($112,500 head of household; $150,000 joint).
- Requires valid Social Security Number (SSN) on tax return; special rules for joint filers, military, and advance payments.
- Protect Consumers from Gas Hikes Fund (New IRC Section 9512):
- Trust fund receives tax revenues; used solely for rebates.
- Administration:
- IRS to issue rules for withholding, deposits, records, returns, and outreach.
- Extends rebate payments/rules to US possessions with "mirror code" tax systems (copying US tax laws).
Significant Changes to Existing Law
- Adds new Chapter 56 to IRC Subtitle E (taxes) for the windfall tax.
- Inserts new Sections 6436 (rebates) and 9512 (fund) into IRC Chapters 65 and 98.
- Updates clerical tables, deficiency definitions, and coordination with US possessions.
- No changes to baseline taxes; this is an additional excise tax with direct rebates.
Potential Impacts
- Government Agencies: IRS/Treasury must administer quarterly tax collection, rebate calculations, fund management, and outreach; increased workload and costs (reimbursed to possessions).
- Citizens: Eligible individuals receive quarterly rebates (via tax credits/refunds) to ease gas costs; higher-income filers get reduced amounts; requires SSN for claims.
- Oil Industry: Large producers/importers face new variable tax on high-price quarters, potentially raising costs passed to consumers or reducing profits.
- International Relations: Minimal direct impact; taxes imports but uses global Brent benchmark; no foreign policy provisions.
Main Stakeholders Affected
- Large oil companies (e.g., those extracting/importing >300,000 barrels/day): Primary taxpayers.
- Individual taxpayers: Rebate recipients (most US residents, excluding dependents/nonresidents).
- IRS and Treasury Department: Handle implementation, collections, distributions.
- US possessions (e.g., Puerto Rico): Receive equivalent rebates/admin funds.
Notable Legal, Constitutional, or Political Implications
- Legal: Standard excise tax authority under IRC; refundable credits treated like others (e.g., math/clerical error rules apply); regulations needed for details like withholding.
- Constitutional: Relies on Congress's taxing power (Article I); no apparent equal protection or due process issues as it targets commercial activity with clear definitions.
- Political: Frames "windfall" profits as targeting "Big Oil" while aiding consumers; could influence energy prices, industry lobbying, and debates on price gouging vs. market incentives.
This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.
Sponsor
Cosponsors (21)
Rep. Magaziner, Seth [D-RI-2], Rep. Tlaib, Rashida [D-MI-12], Rep. DeLauro, Rosa L. [D-CT-3], Rep. Quigley, Mike [D-IL-5], Rep. Amo, Gabe [D-RI-1], Rep. Green, Al [D-TX-9], Rep. Huffman, Jared [D-CA-2], Rep. Pingree, Chellie [D-ME-1], Rep. Jayapal, Pramila [D-WA-7], Rep. Grijalva, Adelita S. [D-AZ-7], Del. Norton, Eleanor Holmes [D-DC-At Large], Rep. Sherman, Brad [D-CA-32], Rep. Casar, Greg [D-TX-35], Rep. McGovern, James P. [D-MA-2], Rep. Cohen, Steve [D-TN-9], Rep. Lofgren, Zoe [D-CA-18], Rep. Pocan, Mark [D-WI-2], Rep. Balint, Becca [D-VT-At Large], Rep. Schakowsky, Janice D. [D-IL-9], Rep. Tokuda, Jill N. [D-HI-2], Rep. Mejia, Analilia [D-NJ-11]
Recent Actions
- 2026-03-17: Referred to the House Committee on Ways and Means.
- 2026-03-17: Introduced in House
- 2026-03-17: Introduced in House
Bill Versions
- Big Oil Windfall Profits Tax Act — issued 2026-03-17 — PDF (15 pages)