News
President Trump signs the “One Big Beautiful Bill” Spending and Tax Package into Law
What It Means for AAPL Members and the Energy Industry
On July 4, 2025, President Donald Trump signed the $3.4 billion budget reconciliation and tax package — the One Big Beautiful Bill Act — into law. Apart from extending the 2017 Trump tax cuts, the nearly 900-page bill includes numerous oil and gas and renewables provisions impacting AAPL members and the broader energy industry.
At bill passage, House Speaker Mike Johnson (R-LA) said, “the House has passed generational legislation that permanently lowers taxes for families and job creators, secures the border, unleashes American energy dominance, restores peace through strength, reduces spending more than any other bill ever has, and makes government more efficient and effective for all Americans.” Senate Majority Leader John Thune (R-SD) said, the bill “will permanently extend tax relief for hardworking Americans […] spur economic growth [and] unleash American energy.”
And the White House said, “The pro-growth policies within this historic legislation are going to fuel an economic boom like we’ve never seen before.”
Following is a summary of key provisions affecting AAPL members as well as additional resources to learn more about the legislation.
Energy and Environmental Provisions
- Environmental Protection Agency Methane Emissions Reduction Program – postpones the program’s Methane Emissions Fee on oil and gas facilities for a 10-year period.
- Provides new financing authority for the Loan Programs Office to support reliable energy technologies like nuclear, and geothermal and energy supply chains.
- Requires federal offshore and onshore oil and gas lease sales, specifically, 30 offshore oil and gas lease sales in the Gulf of America, 6 sales in the Cook Inlet area of Alaska, 4 lease sales in Alaska’s Arctic National Wildlife Reserve, and 5 in the National Petroleum Reserve-Alaska, overturning Biden-era leasing limits. The bill also requires quarterly onshore oil and gas lease sales on federal lands.
- Oil and Gas Lease Royalty Rates – decreases federal royalties for new onshore and offshore oil and gas leases to 12.5% from the 16.67% rate established by the 2022 Inflation Reduction Act.
- Repeals royalties on methane produced on onshore and offshore federal oil and gas leases.
- Allows commingling of production from 2 or more sources before production reaches the point of royalty measurement.
- Provides Department of Energy funding for administrative expenses on loan guarantees related to LNG projects in Alaska.
- Directs the Department of the Interior to establish a permit-by-rule process under which leaseholders may obtain approval to drill for oil and gas on federal land if the leaseholder pays a $5,000 fee and complies with other established regulations.
- Establishes a filing fee for protests of oil and gas lease sales.
- Reinstates noncompetitive leasing procedures under the Mineral Leasing Act to require lands that do not receive bids during an oil and gas lease sale, or where the highest bid is less than the national minimum, to be offered within 30 days for noncompetitive leasing and remain available for 2 years.
- Streamlines the permitting process by allowing project sponsors to pay a fee of 125% of the anticipated costs to prepare an environmental assessment (EA) or environmental impact statement (EIS) to guarantee an EA is completed within 6 months and an EIS is finalized within 1 year.
- Provides a permit-by-rule system in which project sponsors can certify compliance with pre-established criteria and the system would. automatically approve permits if no objections are raised within a specified time and the applicant meets all requirements.
- It also streamlines the process for projects that meet clear, pre-defined standards and directs applicable agencies to develop a price for developers to avoid litigation over environmental reviews, which can otherwise delay projects.
- Eliminates Biden-era White House Council on Environmental Quality funding used to collect data related to environmental and climate issues, tracking of “disproportionate burdens and cumulative impacts,” and ensuring that environmental mapping or screening tools are accessible by community-based organizations or the public.
Tax Provisions
- Permanently extends the individual tax rates President Trump signed into law in 2017, which were set to otherwise expire at the end of the year. The bill also permanently retains the 2017 corporate income tax rates that were lowered from 35% to 21%.
- Preserves intangible drilling cost tax deductions by modifying the corporate alternative minimum tax to allow companies to immediately deduct those costs, which, according to the Domestic Energy Producers Alliance, “protects the ability of independent producers to fully deduct intangible drilling costs in the year they are incurred — a tax provision that has existed since 1918 and is vital to capital reinvestment in new wells.”
- Protects percentage depletion for independent producers and royalty owners, a long-standing deduction, which according to the DEPA, “is critical to the economic viability of small and marginal wells and supports income stability for millions of American royalty owners.”
- Retains the existing tax treatment of carried interest for investments held for longer than 3 years. Earlier versions of the bill would have altered that tax treatment.
- Phases out Sec. 45Y and 48E wind and solar production tax credits enacted in the 2022 Inflation Reduction Act for those facilities starting construction after June 2026 or placed in service after 2027, amending the existing phaseout that ran through 2032. The final version is less restrictive than the original bill that only allowed projects to claim the credit if they began construction within 60 days of bill passage. The final bill removed a House-proposed new excise tax on solar and wind projects if their components came from China.
- Extends tax credit phase-out timelines for battery storage, hydropower, geothermal, nuclear, carbon capture, and clean fuel production through 2032.
- Electric vehicle tax credits of up to $4,000 for used electric vehicles (EVs) and up to $7,500 for new EVs are phased out by September 2025, and EV charging infrastructure tax credits are phased out by June 2026.
- Business Research and Development – restores the ability to permanently deduct research or experimental expenditures paid or incurred after Dec. 31, 2024, but only if domestic. Further, small businesses (revenue of $30 million or less) can apply this change retroactively to expenditures after Dec. 31, 2021, and others can accelerate remaining deductions.
- Limitation on Business Interest Expense – Reinstates the Sec. 163(j) limitation on Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) after Dec. 31, 2024.
- Permanently extends the existing 20 percent qualified business income deduction for sole proprietorships, partnerships, S corporations, and certain trusts.
- Adds income from hydrogen storage, carbon capture, advanced nuclear, hydropower, and geothermal energy to qualifying income of certain publicly traded partnerships treated as C-corporations.
- Bonus depreciation retained for companies – originally set to phase out after 2026, the business benefit has been permanently retained allowing 100% bonus depreciation for qualified production property that businesses use to fully deduct the cost of nonresidential real property often used in manufacturing, production, and refining.
- Tax credits for biofuels are extended an additional four years to 2031.
- Retains the Sec. 45Q credit’s full transferability “to unlock private capital and drive new carbon capture investments, establishing credit value parity for secure geologic storage and utilization-then-storage (i.e., for enhanced oil recovery), inflation-adjusted from 2028 onwards.”
- Updates Sec. 45Q – Carbon Oxide Sequestration Credit, providing that for facilities placed in service after enactment, the credit amount would be the same regardless of whether the taxpayer merely disposed of the captured carbon oxide or undertakes use or utilization of the captured carbon oxide.
- Retains the Sec. 45V clean hydrogen production credit eligibility for qualifying natural gas-based clean hydrogen by adjusting the start construction date to no later than Jan. 1, 2028.
- Retains the Sec. 45X advanced manufacturing incentive to support domestic production of critical minerals and certain energy components.
- Extends the Sec. 45Z clean fuel production credit until 2030 and expands eligibility.
For additional resources and a deeper dive into the bill provisions:
Amendments to IRA Tax Credits in the Senate Budget Bill (White & Case; July 1, 2025)
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