The One Big Beautiful Bill (OBBBA), signed into law on July 4, 2025, brings important changes to taxes and energy policies. These changes are intended to stimulate and increase U.S. oil and gas production and create new opportunities for investors.

If you invest in oil and gas or manage energy funds, this law could be very important for you. Here’s a simple explanation of what the OBBBA means—and why now might be a good time to consider investing in America’s energy sector.

Is Oil and Gas right for your portfolio?

More Oil and Gas Production in the U.S.

For onshore wells, the bill reduces the regulations required to lease federal lands for oilfield development as well as lowers the royalty burden rate on federal lands (fees companies pay to the government based on domestic production) from 16.67% to 12.5%. I believe this helps grow the U.S. energy industry, supports jobs (more than 8 million people worked in this sector in 2022), and strengthens the economy.

Why it matters: More oil and gas production could result in better profits for investors as the U.S. produces more energy at lower costs by the development of federal lands.

Tax Benefits for Investors

The bill expands ways companies can pass earnings directly to investors through structures called Master Limited Partnerships (MLPs), helping investors avoid certain taxes. It also offers:

• The ability to expense 100% of the cost of tangible assets and equipment acquired and placed in service in the current year (Bonus Depreciation).
• Small business incentives such as:
  • extension of the 20% deduction for Qualified Business Income (QBI)
  • increase depreciation amounts for Section 179 depreciation
  • immediate deduction for domestic R&D expenses
• The tax credits increased by Section 45Q are available for qualified carbon oxide capture.

Why it matters: These tax benefits can help reduce investors’ federal and state tax burdens.

Focus on American Energy and Security

The law limits tax breaks for energy projects linked to certain foreign countries, encouraging investment in U.S.-based energy infrastructure. This is meant to protect national security and strengthen American energy independence.

Shift Back to Oil and Gas Over Renewables

The bill prohibits new tax credits to be issued for future wind and solar energy projects, signaling a move to support traditional energy sources like oil, natural gas, and coal. These fossil fuels made up 75% of U.S. energy production in 2023.

Why Consider Investing Now?

With the philosophical governmental shift from green energy incentives, coupled with the new tax incentives, the U.S. oil and gas industry is set for growth and expansion. Whether you’re an individual investor or manage funds, the OBBBA offers opportunities to invest with potential tax advantages and profit growth.

Interested in learning how to invest wisely within the oil and gas industry under the One Big Beautiful Bill? Contact us to explore your options for participation in America’s oil and gas future.

Be sure to check out our webinar, “Taxes and One Big Beautiful Bill,” with tax strategist Ed Lyon and King SVP Brad Holden on Thursday, July 24, 2025, at 1 p.m. CST. You can register here.