Gross Production Tax

AAA

DEFINITION of 'Gross Production Tax'

A state tax imposed on companies that generate revenues by depleting non-renewable resources. Such companies include producers of oil and gas, coal miners and miners of metals and minerals. Gross production taxes are normally introduced as a means of compensating the state for the pollution that miners emit.


Also known as severance tax.

INVESTOPEDIA EXPLAINS 'Gross Production Tax'

One method of calculating the gross production tax is as a percentage of gross value based on the average monthly product price. This tax is generally deductible from the company's federal tax. Some states may also charge an extraction tax on top of the gross production tax.

RELATED TERMS
  1. Taxes

    An involuntary fee levied on corporations or individuals that ...
  2. Double Taxing

    A tax law that causes the same earnings to be subjected to taxation ...
  3. Nonrenewable Resource

    A resource of economic value that cannot be readily replaced ...
  4. Corporate Tax

    A levy placed on the profit of a firm, with different rates used ...
  5. Severance Tax

    A tax imposed on the removal of nonrenewable resources such as ...
  6. Guideline Premium And Corridor ...

    A test used to determine whether an insurance product can be ...
Related Articles
  1. Investing Basics

    Oil: A Big Investment With Big Tax Breaks

    Oil and gas investments can provide unmatched deduction potential for accredited investors.
  2. Active Trading

    Oil And Gas Industry Primer

    Before jumping into this hot sector, learn how these companies make their money.
  3. Mutual Funds & ETFs

    Investing In Oil And Gas UITs

    Unit investment trusts provide direct exposure to the energy sector, fueling better returns.
  4. Fundamental Analysis

    Accounting For Differences In Oil And Gas Accounting

    How a company accounts for its expenses affects how its net income and cash flow numbers are reported.
  5. Stock Analysis

    What Would Be Of BreitBurn Energy This Summer?

    This Spring, BreitBurn Energy Partners' banks will take a closer look at its credit facility and redetermine its borrowing base.
  6. Stock Analysis

    Why Investors Bailed On Halcon's Stocks

    The unexpected plunge in the oil price over the past few months sent Halcon Resources' stocks down nearly 75%.
  7. Stock Analysis

    Cheaper Solar Power Gets Some Major Backers

    While solar hasn’t lived up its potential, the times are changing. New investment has surged. For investors, this could be the time to buy solar stocks.
  8. Stock Analysis

    What Are Kinder Morgan’s Plans For Growth In 2016?

    One thing investors likely love about Kinder Morgan is its robust backlog of future projects, like growing its generous dividend by 10% per year.
  9. Mutual Funds & ETFs

    Why Big Russia Bettors Should Consider This ETF

    Investing in the RSX ETF is investing in Russia.
  10. Stock Analysis

    What Has Been Delta Airlines Strategy To Soar?

    Airline stocks have soared over the past several years, and Delta Air Lines has been one of the leading airlines to reap the benefits. 

You May Also Like

Hot Definitions
  1. Risk Averse

    A description of an investor who, when faced with two investments with a similar expected return (but different risks), will ...
  2. Fixed-Charge Coverage Ratio

    A ratio that indicates a firm's ability to satisfy fixed financing expenses, such as interest and leases. It is calculated ...
  3. Efficiency Ratio

    Ratios that are typically used to analyze how well a company uses its assets and liabilities internally. Efficiency Ratios ...
  4. Fixed Cost

    A cost that does not change with an increase or decrease in the amount of goods or services produced. Fixed costs are expenses ...
  5. Subsidy

    A benefit given by the government to groups or individuals usually in the form of a cash payment or tax reduction. The subsidy ...
  6. Sunk Cost

    A cost that has already been incurred and thus cannot be recovered. A sunk cost differs from other, future costs that a business ...
Trading Center