Oil Company Windfall Profits Tax Act of 2026

The Oil Company Windfall Profits Tax Act of 2026 (S5569) was introduced by Senator Adam Schiff (D-CA) on September 28, 2026, and referred to the Senate Committee on Finance. The bill proposes to amend the Internal Revenue Code to impose a 50% excise fee on 'excess oil profits' of integrated oil companies. Excess profit is defined as adjusted taxable income above a baseline calculated as the average of the five prior taxable years (excluding the highest year) plus 10%. The fee applies to taxable years beginning after December 31, 2025.

The bill is in an early legislative stage with no cosponsors and has been referred to committee. Given the 119th Congress's Republican majority in both chambers, the bill faces steep odds for passage. It represents a partisan proposal targeting the oil industry's profitability during periods of high earnings.

If enacted, the fee would directly reduce the after-tax net income of integrated oil companies in years where profits exceed the historical baseline. For ExxonMobil ($XOM), Chevron ($CVX), and ConocoPhillips ($COP), which reported substantial net incomes in FY2025, the fee could meaningfully lower earnings in high-profit years. However, the impact would be cyclical, as the baseline adjusts over time.

The money trail is a tax increase, not a spending authorization. The fee would generate government revenue but reduce corporate profits. No specific funding is allocated; the bill is a revenue-raising measure.

Structural winners and losers: The clear losers are integrated oil companies with significant U.S. operations. Companies with more stable or lower profit margins relative to the baseline would be less affected. The bill does not target renewable energy companies, utilities, or other energy sectors. Political dynamics suggest low probability of advancement, but if it gains traction, it could signal broader tax policy shifts against fossil fuels.