Master Limited Partnerships for Oil and Gas Companies


Energy - Fossil Fuels

Subsidy Type

Tax Expenditure

Committees of Jurisdiction

House Committee on Ways and Means, Senate Finance Committee

$84 FY 23 Budget Score (in mil.)
$1,136 FY 23-32 Budget Score (in mil.)

A Master Limited Partnership (MLP) is a partnership, or a limited liability company (LLC) with interests that are traded on a public exchange or an over-the-counter market, like stock in a corporation. MLPs are treated essentially as an aggregation of the individual investors, and thus income is taxed as individual income for the investors rather than as corporate income. For an MLP to qualify for this tax-advantaged partnership treatment under the tax code, 90 percent of its income must come from qualified sources, which include interests, dividends, rents, sales, and income or gains from the exploration, development, mining or production, processing, refining, transportation or marketing of any mineral, natural resource, gas, oil, timber, carbon dioxide, biofuel, liquefied gas or coal-derived fuel. The definition of qualified income has resulted in the oil, gas and coal industries dominating the use of tax-advantaged MLPs. As of May 30, 2021, 54 of the 68 MLPs being traded publicly work in the fossil fuel industry.

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