Last week, President Donald Trump signed what is likely the most regressive U.S. tax-and-spending bill in U.S. history, giving the top one percent of families more than $1 trillion in tax cuts while slashing Medicaid health coverage and food assistance for the poor. It is also one of the worst environmental bills in U.S. history.
Trump’s “Big Beautiful Bill” provides billions of dollars in giveaways to the fossil fuel industry and its wealthiest executives while taking a machete to our national effort to confront the climate crisis and build healthier, more sustainable, and more just communities.
“The Big Ugly Bill is a direct attack on our communities and our climate,” says Irene Burga of GreenLatinos. “This bill puts profit over people, and it will worsen the heat, pollution, and injustice we are already fighting to survive.”
The new law compounds the already $17 billion in direct federal subsidies U.S. taxpayers pay to oil, gas, and coal companies every year. It cuts hundreds of billions of dollars in tax incentives for renewable energy, despite it being cheaper, healthier, more efficient, and more reliable than fossil fuels. As a result, the law threatens nearly a million U.S. jobs and will result in higher electricity and transportation costs for people living in every state in the continental U.S.
The power of the fossil fuel industry over Trump and the Republican Party is on full display in their Big Beautiful Bill. Mike Sommers, president of the American Petroleum Institute, the fossil fuel industry’s largest lobbying group, told CNBC, “It includes almost all of our priorities.”
Here’s a breakdown of every major dirty gift the tax bill gives the fossil fuel industry and takes away from the rest of us.
More Tax Breaks
The fossil fuel industry’s biggest win comes from successfully securing all of the tax benefits from Trump’s 2017 tax law, including those that were set to expire this year. The industry then received many significant new benefits on top of these existing giveaways.
Trump’s 2017 tax bill reduced the overall corporate tax rate from 35 percent to 21 percent, or by a minimum of 40 percent a year forever. In 2024, Trump campaigned on lowering the rate even further to 15 percent — with an estimated $1 trillion price tag. The expense likely became cost prohibitive when trying to advance his already $4.5 trillion new tax bill, John Whiten, deputy director of the Institute on Taxation and Economic Policy, tells me.
The American Petroleum Institute publicly opposed a reduction below 21 percent in November.
“Corporate and business lobbyists were much more interested in a trio of corporate tax breaks” set to expire in 2025, Whiten says. The new tax bill not only reinstates the provisions permanently, but also makes them more lucrative. They are corporate tax subsidies for “bonus depreciation” — a measure particularly important to the fossil fuel industry — and deductions for research and interest payments.
I calculated that in just the first year of Trump’s 2017 tax bill, the reduced corporate tax rate alone resulted in a combined $25 billion bonanza for 17 American oil and gas companies. ExxonMobil got the highest single payout at nearly $6 billion, ranking second only to Apple as the nation’s single largest corporate beneficiary of the tax bill in its first year.
Companies received such huge payouts because few actually pay the nominal tax rate, which is more of a starting point from which they then use loopholes to reduce the amount they actually pay — known as their “effective tax rate.” For many oil and gas companies, their effective tax rate is zero, or less than zero — meaning they get tax refunds from the American public.
“In the case of Exxon, they have never in the past five years paid anything close to a 35 percent U.S. tax rate on income,” Matt Gardner, a senior fellow at the Institute on Taxation and Economic Policy, told me in 2018. “And now their already low tax rate is being slashed by another 40 percent.”
As a result of the 2017 tax law, ExxonMobil’s effective tax rate fell from just 3.7 percent in 2016 to a negative -85.6 percent in 2017, while ConocoPhillips’s effective tax rate fell to -1.5 percent.
$1.1 Billion Oil and Gas Bonus
President Joe Biden tried to address the problem of companies avoiding paying taxes in the 2022 Inflation Reduction Act. It requires companies that report $1 billion or more in profits to pay a minimum 15 percent tax rate, known as the “corporate alternative minimum tax.”
Under heavy industry lobbying, the new tax bill now gives oil and gas companies a special new carveout that will allow many to avoid the alternative minimum tax altogether. It gives more than $1.1 billion in new tax breaks to the industry, according to its supporters.
Oil and gas companies already deduct most of the costs associated with preparing and drilling wells in the first year that the costs are incurred, rather than over the life of the well. These so-called “intangible drilling costs” include everything from labor to supplies and amount to one of the largest tax breaks available to the industry. Repealing the deduction would save U.S. taxpayers an estimated $13 billion. The tax bill expands it, by allowing oil and gas companies to apply the deduction when calculating their alternative minimum tax.
Marathon Oil identified the alternative minimum tax as the only tax liability it expected to pay in federal taxes in 2024. ConocoPhillips acquired Marathon last year. Sens. Elizabeth Warren (D-Mass.), Ron Wyden (D-Ore.), Sheldon Whitehouse (D-R.I.) and Chuck Schumer (D-N.Y.) wrote to ConocoPhillips seeking answers about the firm’s lobbying efforts to win the tax loophole, noting that it’s “lobbying disclosures explicitly prioritize this handout.”
The provision was backed by the American Petroleum Institute. The American Exploration and Production Council, an industry lobbying group representing mid-sized oil and gas companies including ConocoPhillips, also lobbied for the change, calling it a “pillar” of the group’s internal plan for dismantling Biden-era climate policies, according to The Washington Post.
The $65 Billion Bonus Depreciation
The tax bill extends a key provision of the 2017 tax law set to expire, while making it deductible against the alternative minimum tax.
“Bonus depreciation” allows companies to write off 100 percent of capital expenditures, such as tangible drilling costs, equipment, and pipelines in the first year costs are incurred rather than over the life of the asset. Because it’s such a capital-intensive industry, this is a particularly lucrative subsidy for Big Oil.
Extending the deduction was “a major priority of Big Oil and Big Tech lobbyists,” Families Over Big Oil explains. It is also the most expensive business tax break in the new tax bill, costing U.S. taxpayers $65 billion.
Gut Punch to Renewable Energy
The fossil fuel industry’s second largest payout after tax breaks comes from the Big Beautiful Bill kneecapping its leading competitors — purveyors of clean, renewable, efficient, and cost-effective renewable energy.
The tax bill rescinds much of the hundreds of billions of dollars in tax incentives and funding established under Biden, including in the Inflation Reduction Act — the nation’s most aggressive climate, green energy, environmental justice, and jobs bill.
The tax bill “represents a wholesale attack on clean energy progress and a giveaway to the very industries driving the climate crisis,” says Jennifer Krill, executive director of the national environmental organization, Earthworks. It “sacrifices frontline communities so that oil, gas and mining corporations can pollute with impunity.”
In an email, leading climate activist and author, Bill McKibben, founder of Third Act, which organizes people over the age of 60 for action on climate and justice, stresses that even in the wake of the tax bill, solar remains cheaper than fossil fuels — “even without subsidies.”
Pay-to-Play Environmental Deregulation
The tax bill advances the conservative-led assault on a bedrock U.S. environmental law, the National Environmental Policy Act, which requires federal agencies to consider the human environment prior to issuing authorizations for major projects and allow the public to weigh in on their decisions.
NEPA has been aggressively hollowed out over the last six months by Trump administrative actions, the U.S. Supreme Court, and now Republicans in Congress. The tax bill provides new ways for fossil fuel (and other) companies to pay to skirt the law and the public participation the law enshrines.
The bill lets companies pay a fee to guarantee a fast-tracked environmental assessment required under NEPA that is completed within six months to a year. This limits not only the extent of the review, but also the opportunity for public comment and input.
Evergreen Action calls it “legalized bribery” and a “gift to Big Oil,” in an emailed statement, adding that “it’s a slap in the face to communities already forced to live next to toxic infrastructure and forces even more communities onto the frontlines of fossil fuel pollution.”
Weakening the Methane Rule
Methane is a greenhouse gas 28 times more destructive to the climate than carbon dioxide, and can cause a host of human health harms. “Natural gas” is almost entirely composed of methane, and is more appropriately called “methane gas.”
Oil and methane gas tend to coexist in nature, and oil and gas operations both release very large amounts of methane into the air and atmosphere. The Biden administration implemented a series of rules meant to reduce those emissions, which Trump is hell-bent on undoing. Congress is also trying to oblige.
The tax bill weakens Biden’s methane rules by rescinding all unobligated funding provided to the Environmental Protection Agency for financial and technical assistance for methane monitoring and mitigation. It also pushes back by 10 years the implementation of a fee that was to be charged on excessive methane emissions , rendering it useless for at least a decade.
Fire Sale
The Biden administration used limits and outright bans oil and gas lease sales as a means to reduce fossil fuel production and operations on public lands and waters. In his last year in office, and for the first time since 1966, the federal government offered no offshore oil and gas lease sales.
To ensure that such actions are not repeated in the future, the fossil fuel industry enshrines mandatory lease sales in the tax bill.
“You can also mandate lease sales in reconciliation,” Dustin Meyer of the American Petroleum Institute told Upstream Magazine in March. “And you can get 10 years of certainty there. I think mandating those lease sales via Congress is a smart approach.” The president of the National Ocean Industries Association, Erik Milito, called mandated lease sales “absolutely essential.”
In a section titled, “Gulf of America sales,” the Big Beautiful Bill requires a whopping 30 offshore oil and gas lease sales in the Gulf of Mexico. It also requires six lease sales in the Cook Inlet area of Alaska by 2040 and quarterly sales in Wyoming, New Mexico, Colorado, Utah, Montana, North Dakota, Oklahoma, Nevada, and Alaska — including five in the Alaskan National Petroleum Reserve.
The tax bill also opens the Alaskan Arctic National Wildlife Refuge to oil and gas drilling by requiring four lease sales there by 2032. For decades, the fossil fuel industry has tried to drill in the refuge, only to be repelled by the Native peoples who rely on it, their allies, and many more. Twenty years ago, the Gwich’in Steering Committee, a group formed by a decision of a council of chiefs from all the Gwich’in tribes to protect the Refuge, organized a six-week vigil near the U.S. Capitol Building against proposed drilling in the refuge.
The 2017 Trump tax law opened the refuge to oil and gas drilling, but the Biden administration canceled all of the lease sales planned there and the contracts that had been signed during Trump’s term. The Big Beautiful Bill not only requires four lease sales, but Alaska will also receive a majority of the royalties from the new production. “This concession likely helped guarantee the vote of Alaska’s Sen. Lisa Murkowski, who was the last Republican holdout on the bill,” reports Inside Climate News.
Kristen Moreland, executive director of the Gwich’in Steering Committee, called the new law “shameful” in a statement. “The effort to hand over the sacred coastal plain of the Arctic Refuge to oil and gas development flies in the face of our rights as Indigenous people,” she said, adding that it “is a threat to the very heart of our identity.”
Slashing Royalties
While increasing access to public lands, the Big Beautiful Bill slashes the royalties that producers pay the government to pump our oil and gas, stimulating increased production.
Royalties for drilling on public land are reduced by about 25 percent, at a cost estimated at $6 billion to taxpayers over the next 10 years and increasing to an average of $3 billion annually through 2050, according to think tank Resources for the Future.
$14.2 Billion Oil Production Subsidy via Carbon Capture
The tax bill’s single largest new handout to the fossil fuel industry is an estimated $14.2 billion in additional tax incentives over the next decade for companies to use carbon capture technology to increase oil extraction, reports Families Over Big Oil.
Carbon capture refers to technologies that trap or “capture” carbon dioxide from polluting sources like fossil fuel power plants, refineries, and petrochemical plants. Carbon capture and storage (CCS) is a means of attempting to store the carbon underground where it cannot contribute to climate change. “Enhanced recovery” captures carbon in order to reinject it back into a depleted well to extract more oil and gas. The tax bill increases the tax credit for companies using enhanced recovery.
Since 2008, the U.S. government has provided a tax credit to support CCS. It is a technology with a decades-long history of overpromising and under-delivering, with the number of CCS projects that have failed or underperformed considerably outnumbering successful projects. CCS also produces its own emissions which dramatically reduce its benefit.
For many experts, CCS is viewed as a cynical distraction steering investment away from efforts to phase out fossil fuels while allowing the fossil fuel industry to continue with business as usual. CCS also adds another burden of even more infrastructure and pollution in local communities already over-burdened with fossil fuel operations. In 2023, Louisiana’s Livingston Parish Council imposed a temporary moratorium on carbon capture injection wells where they live.
Several firms, including Occidental Petroleum, which is completing a large carbon-capture plant in the West Texas oil fields, sought the expanded subsidies. Occidental’s CEO said she personally lobbied President Donald Trump for the subsidy, The Washington Post reported. Pipeline owners also received their own separate and additional $3.2 billion in giveaways for investing in carbon capture, as well as other “false solutions,” according to Families Over Big Oil.
Repealing all CCS tax incentives would save taxpayers an estimated $36 billion over 10 years. The House bill would have reduced the value of the CCS tax credit to make it less generous and to raise more revenue. But “as soon as the Senate got a hold of it, they chose to supercharge the tax credit and make it even more generous to the oil and gas industry,” Friends of the Earth’s Shankar Roth tells me.
“It reveals that the center of power in the Republican Party remains with the Chamber of Commerce/American Petroleum Institute set…[those] committed more to providing welfare for massive corporations than to any kind of small government principle,” he adds.
Backing Backwards Coal
The coal industry received many special perks from the tax bill. It mandates at least 4 million additional acres of federal land be made available for coal mining while cutting the royalty payments coal companies pay the government.
Snuck into the bill is a new tax credit for the cost of producing metallurgical coal regardless of whether such production occurs inside or outside of the United States and designates the dirty fuel a “critical mineral.” Metallurgical coal, also known as coking coal, is produced to be used in the manufacture of steel.
Friends of the Earth’s Shankar-Ross tells me the 2.5 percent tax credit was slipped in at the last minute over the weekend before the tax bill became law. “It’s just enough to grease the wheels,” Shankar-Ross says. “It’s a bit of a sweetener to reward a handful of loyal partners in the Trump coalition, like Warrior Met and Ramanco.”
Warrior Met and Ramanco are small coal companies that produce metallurgical coal exclusively. Warrior Met is based in Alabama where it has two active mines. Ramanco is based in Kentucky and produces from its sites in West Virginia and Virginia.
Warrior Met is a favorite of the Trump administration. It is also the notorious target of a nearly two-year-long historic strike by the United Mine Workers of America supported by a roster of musicians, including Tom Morello. The strike ended in 2023, the same year the National Labor Relations Board issued a ruling against the company.
An investigation by Inside Climate News found that around three-quarters of metallurgical coal produced in the U.S. is exported for steelmaking. In Alabama, more than 90 percent of the coal is shipped to foreign markets. The tax break will therefore subsidize production of an energy source largely used abroad.
There are also seven steel plants in the U.S. that still use metallurgical coal. A recent report from Industrious Labs documents devastating health and other harms to local communities where the plants operate. Public health and climate advocates have worked for years to transition the plants to cleaner sources of energy and tell me the tax credit moves the nation backwards.
“If fascism scares you the way it does me, figuring out how to break the centralized power of the fossil fuel industry is a key form of resistance,” warns McKibben in his new book, Here Comes the Sun.
We’ve got our work cut out for us.
