Please ensure Javascript is enabled for purposes of website accessibility Representatives Pielli & Khan Introduce Natural Gas Severance Tax

Representatives Pielli & Khan Introduce Natural Gas Severance Tax

Legislation would generate more revenue for Pennsylvania

Rep. Tarik Khan    December 9, 2025 | 10:21 AM

HARRISBURG, Dec. 9 – State Reps. Chris Pielli, D-Chester, and Tarik Khan, D-Phila., have introduced a bill that would establish a severance tax on natural gas production. Specifically, the legislation introduces a per-volume severance tax on natural gas operations.

Pielli said Louisiana, Ohio and Texas have all implemented a similar tax that has generated a large increase in state revenue. For example, Texas and Pennsylvania lead the nation in natural gas production but Texas collected $2.13 billion in severance tax revenue in 2024. Pennsylvania averages only $200 million a year from its per-well impact fee. Pennsylvania’s impact fee is unique and no other gas-producing state has anything like it. It has long been criticized as a corporate giveaway to shale producers, he said.

“The Marcellus Shale is our natural resource. As such, we should not only suffer its impacts but share in its benefits with a fair severance shale tax to benefit our schools, our seniors, our streets and for the service and support that every Pennsylvanian truly deserves,” Pielli said. “It’s long past time that these multi-billion-dollar companies pay their fair share. I urge my colleagues to support this important legislation aimed at ensuring that all Pennsylvania residents benefit from the access we provide to our land and other natural resources.”

Khan said, “Pennsylvania has been getting ripped off while gas is pulled from our ground and profits flow out of state. A severance tax is common sense and ensures that money is invested back into our schools, infrastructure and communities.”

Under their legislation, Pennsylvania’s current impact fee would be maintained, allowing counties and municipalities directly impacted by natural gas drilling operations to continue to receive the revenue they deserve. The legislation would also provide natural gas producers that pay the fee in a timely manner with credits against the severance tax, helping to avoid any “double taxation” concerns they may have.

The bill is awaiting assignment of a number and state House committee. 

Pielli and Khan will discuss the legislation at noon Wednesday, Dec. 10 during a virtual conference presented by Penn Policy. You can view the press conference through the link here

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