Protecting America’s Small Oil and Gas Producers and Rural Jobs Act

“(C) Applicable percentage

“(i) In general—For purposes of subparagraph (A), the term applicable percentage means the percentage (not greater than 25 percent) equal to the sum of—

“(I) 15 percent, plus

“(II) 1 percentage point for each whole dollar by which $70 exceeds the reference price for crude oil for the calendar year preceding the calendar year in which the taxable year begins.

“(ii) PPI adjustment

“(I) In general—In the case of any taxable year beginning in a calendar year after 2027, the $70 amount in clause (i)(II) shall be increased by an amount equal to—

“(aa) such dollar amount, multiplied by

“(bb) the PPI adjustment factor for such calendar year.

“(II) PPI adjustment factor—For purposes of subclause (I), the PPI adjustment factor for any calendar year is the percentage (if any) by which—

“(aa) the PPI for the preceding calendar year, exceeds

“(bb) the PPI for calendar year 2026.

“(III) PPI for any calendar year—For purposes of subclause (II), the PPI for any calendar year is the average of the Producer Price Index for Drilling Oil and Gas Wells, as published by the Bureau of Labor Statistics of the Department of Labor, as of the close of the 12-month period ending on August 31 of such calendar year.”

“(H) Nonapplication of taxable income limitation—With respect to so much of the allowance for depletion as is determined under subparagraph (A)—

“(i) subsection (d)(1) shall not apply, and

“(ii) the second sentence of subsection (a) of section 613 shall not apply.”