Heinrich Introduces Legislation Ending Outdated Tax Breaks for Oil and Gas Companies to Drill Overseas

WASHINGTON - Today, U.S. Senator Martin Heinrich (D-N.M.), Ranking Member of the U.S. Senate Energy and Natural Resources Committee, introduced the American Energy Independence & Tax Fairness Act, legislation to repeal outdated tax breaks that allow major oil and gas companies to reduce their U.S. tax obligations for overseas oil and gas production. The legislation would ensure the tax code no longer rewards companies for investing abroad instead of here at home, while strengthening American energy security and requiring some of the world's most profitable corporations to pay their fair share.

This legislation comes as the largest oil and gas companies continue to rake in record profits while American families feel the squeeze from rising energy costs. President Trump's reckless and costly war has driven up global oil prices and increased pressure on consumers at the pump, while outdated tax breaks continue to give some of the world's most profitable companies special treatment for overseas oil and gas production.

Recent analysis by the FACT Coalition found that from 2017 to 2025, major U.S. oil companies paid $135 billion in foreign taxes while only paying $29 billion in U.S. taxes. At the same time, the oil and gas industry continues to report record profits. The disparity is driven by U.S. tax provisions that benefit overseas extraction. During this quarter, Exxon and Chevron alone reported more than $26 billion in combined net income, with Exxon doubling its profits and Chevron reporting one of its most profitable quarters ever.

"Oil majors shouldn't get a tax break for going overseas to produce energy, but that's essentially what our current tax policy does. That's where my American Energy Independence & Tax Fairness Act comes in. It will help put American energy development on an even playing field with energy development that's happening in the Middle East or anywhere else," said Heinrich. "At a time when oil majors are making billions in profits per quarter, they can afford to pay their fair share."

Heinrich's American Energy Independence & Tax Fairness Act would:

• Eliminate preferential tax treatment for foreign oil and gas extraction income, ensuring overseas fossil fuels profits are treated like other foreign business income under the U.S. tax code;
• Close loopholes that allow companies to generate additional foreign tax credits from shale oil and tar sands development;
• Reform foreign tax credit rules to prevent oil and gas companies from misclassifying payments to foreign governments as taxes rather than royalties in order to reduce their U.S. tax liability.

For decades, the U.S. tax code included incentives to encourage overseas oil and gas production. Today, the United States is the world's leading oil and gas producer and a net exporter of fossil fuels. And these outdated tax provisions provide special treatment to some of the world's most profitable companies. By closing these loopholes, the legislation will strengthen American energy security, support domestic job creation, and help accelerate the transition to a more reliable and affordable energy future.

A one-page factsheet of the bill is here.

A section-by-section summary of the bill is here.

The full text of the bill is here.

As Ranking Member of the U.S. Senate Energy and Natural Resources Committee, Heinrich has repeatedly pressed the Trump administration to reverse policies that raise energy costs for working families, and hold corporations accountable, through hearings, oversight letters, and direct engagement with the Trump administration officials:

In June, Heinrich hosted a roundtable and discussed how the Trump administration's policies, including the war with Iran, have driven up energy costs for families, consumers, communities, and small businesses.

In May, Heinrich hosted a roundtable with local small business owners, Roadrunner Food Bank, and Women's Economic Self-Sufficiency Team, Corp. (WESST) to discuss how President Trump's global tariffs and war with Iran are making gas, groceries, and everyday essentials more expensive for New Mexico families and businesses.

Heinrich also wrote to the CEOs of the six biggest U.S. airlines seeking information on the current economic conditions of the airline industry as President Trump's war in Iran continues, requesting that the airlines detail their plan to address rising jet fuel costs, and whether companies will cap or reduce executive compensation to help offset rising costs.

For more information on Heinrich's actions to hold President Trump accountable for his illegal, costly, and reckless war on Iran, click here.

For more information on Heinrich's work to lower energy costs for New Mexico families, click here.

For more information on Heinrich's work to combat President Trump's tariffs and lower the cost of groceries and everyday essentials, click here.

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