Article
A closer look at R&D credits for the oil and gas industry
Jan. 7, 2024 · Updated Jan. 15, 2026 · Authored by Lori Mettille, Cody Schoenig, Pat Hanley, Daniel Kemp
A version of this article appeared in the Dallas and Denver Business Journal on Oct. 7, 2024.
The oil and gas industry is no stranger to innovation, and substantial tax incentives are available to help support this activity.
The R&D tax credit is available to companies developing new or improved products, processes, techniques, formulas, inventions, and software.
With the introduction of the One Big Beautiful Bill Act (OBBBA), substantial changes to research and experimental (R&E) expenditures and their tax treatment were made effective, starting for tax years beginning after Dec. 31, 2024.
These changes include the elimination of the capitalization requirement of domestic R&E expenses, creating a great opportunity for the oil and gas industry to use the lucrative R&D tax credit.
What is the R&D tax credit?
The R&D tax credit is a dollar-for-dollar tax savings that directly reduces a company’s tax liability. There’s no limitation on the amount of expenses and credit that can be claimed each year.
The R&D tax credit is a dollar-for-dollar tax savings that directly reduces a company’s tax liability. There’s no limitation on the amount of expenses and credit that can be claimed each year.
If the R&D credit can’t be used immediately or completely, any unused credit can be carried forward for up to 20 years. Previously filed tax returns can typically be amended for up to three years to claim the R&D credit, retrospectively, providing an avenue to recoup previously paid taxes.
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