TAXES ON OIL AND GAS ROYALTY

In addition to Federal (and in some areas, State) income taxes, by my count mineral and royalty owners also pay ad valorem property taxes, oil conservation taxes, and if your property produces both oil and natural gas, taxes on each of those.  These are "severance" taxes, and in Texas are 4.5% on crude and 7.5% on natural gas.  Notice on your next check detail that these severance taxes come right off of your check.  Yes, on a gas well, you only get paid for 92.5% of the income due your interest for the product you own.  So in Texas, on a two product lease, we pay five different taxes.  Only one of which considers whether or not a lease is making any money.  If you happen to own the surface over your production, you pay a separate property tax for that.  That is six.