Mineral rights tax calculator
Two quick estimates for mineral owners: the capital gains tax on selling your minerals (including the stepped-up basis heirs get), and the severance tax on your royalty income. Every number is a rough estimate, and the math is printed under each result.
Weighing a sale? Read our plain-English guide to taxes on selling mineral rights →
Capital gains tax on a sale
Estimate the tax on selling your mineral rights and what you'd net after tax.
Estimated net proceeds
Estimates only — not tax or legal advice; confirm with a CPA. This simplified calculation ignores selling costs, depletion recapture, alternative minimum tax, and the interaction of the gain with your other income. Actual tax depends on your full return and your state's rules.
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How the sale tax is figured
Your taxable gain is the sale price minus your cost basis (never below $0). For a long-term holding we apply your chosen capital-gains rate, optionally add the 3.8% NIIT, and add any state income tax. Net proceeds are the sale price minus all of that tax.
If you held the minerals a year or less, the gain is short-term and taxed as ordinary income at your regular bracket — so we show the gain but don't estimate the tax, because it depends on your whole return. Talk to a CPA for that case.
The biggest lever for heirs is stepped-up basis: your basis resets to the date-of-death value, so a sale soon after inheriting often shows little or no gain. More detail in our mineral rights tax guide.
Severance tax on royalties
Estimate the state severance tax on your gross royalty value and what's left over.
- Severance tax owed
Net royalty after severance
Estimates only — not tax or legal advice; confirm with a CPA. Severance is often already withheld on your check, and states add small conservation or regulatory fees on top. Federal income tax on your royalties (and any depletion deduction) is separate from this.
How severance tax is figured
Severance tax is simply your gross royalty value multiplied by the state rate: gross × rate = tax owed. What's left — gross minus the tax — is your net royalty from the severance step. It's usually withheld before your check is cut, so this shows you roughly how much of the headline value the state takes.
Rates and product definitions differ by state, and some states offer reduced rates for low-producing or enhanced-recovery wells. Use your operator's check detail or a CPA for the exact figure.
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Mineral rights tax questions
How are mineral rights taxed when you sell them?
A sale of mineral rights is generally taxed as a capital gain: the sale price minus your cost basis. If you held the minerals more than a year, the gain is a long-term capital gain, taxed at 0%, 15%, or 20% depending on your income — potentially plus the 3.8% Net Investment Income Tax and any state income tax. Held a year or less, the gain is short-term and taxed as ordinary income. See our guide to taxes on selling mineral rights.
Do heirs pay tax on inherited mineral rights?
Usually far less than people expect. Inherited minerals get a "stepped-up basis" — your cost basis resets to the fair market value on the date of death. If you sell soon after inheriting, the gain (sale price minus stepped-up basis) is often close to zero, so there may be little or no capital gains tax. Getting a date-of-death valuation is what makes this work. This is an estimate, not tax advice — confirm with a CPA.
What is oil and gas severance tax?
Severance tax is a state tax on the value of oil, gas, and minerals removed ("severed") from the ground. As a royalty owner you typically pay it as a percentage of your gross royalty value, and it is often already withheld on your check. Rates vary by state and product — for example Texas is about 4.6% on oil and 7.5% on gas, Oklahoma around 7%, and New Mexico around 3.75%.
Can I avoid capital gains tax with a 1031 exchange?
Sometimes. Mineral and royalty interests are generally real property, so a properly structured 1031 like-kind exchange into other qualifying real estate can defer capital gains tax on a sale. The rules are strict on timing and use of a qualified intermediary, and not every interest qualifies. Talk to a CPA or tax attorney first, and read our mineral rights tax guide.