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 Severance TaxForms & InstructionsDepartment of Revenue 2021

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colorado's natural resources are an important part of the state's identity whether it's our abundant sunshine beautiful mountains or land rich with soil for growing crops we work hard to make sure those resources are protected and conserved oil natural gas and other fossil fuels are also important natural resources for Colorado one way states protect these and other types of resources is by levying a severance tax a severance tax is a tax on the production or extraction of non-renewable natural resources the tax lets Colorado recapture some of the value lost when resources are extracted and helps offset impacts to communities where this type of development occurs in Colorado 95% of severance tax collections come from oil and natural gas production how is severance tax calculated each state differs in how they impose severance taxes on oil and gas production Colorado tax is the value of the resource when it comes out of the well also called the wellhead value Colorado uses the wellhead

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