Interactive Tools

Intangible Drilling Cost Program

Free calculator: estimate the potential first-year tax deduction from an Intangible Drilling Cost (IDC) program by amount invested and tax rate.

An intangible drilling cost deduction applies to the portion of a drilling investment spent on non-salvageable items — labor, fuel, drilling fluids and site preparation. Multiply the amount invested by the program's IDC percentage, commonly 60% to 90%, to get the deductible amount, then multiply that by your marginal federal rate plus any state income tax rate to estimate the first-year reduction in tax. The remaining tangible portion is generally depreciated over several years rather than deducted immediately.

Deduction = Amount invested × IDC percentage First-year tax savings = Deduction × (marginal federal rate + state rate)

The figures below are an estimate for educational purposes. Oil and gas drilling partnerships are speculative, illiquid private placements limited to accredited investors and can result in loss of principal. Confirm your own numbers with your CPA or tax advisor before acting.

Estimated first-year tax savings —

Estimate for educational purposes only, based on the figures below. Confirm your own numbers with your CPA or tax advisor before acting.

IDC Investment Details

Estimate how much you could save in taxes in the first year of an IDC investment.

IDC deductions offset your ordinary income at your marginal federal tax rate.

60% 70% 90%
✅ No state income tax

Your IDC Investment Breakdown

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Total Investment

First-Year Tax Savings Estimate

IDC Deduction Amount
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Federal Tax Savings
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State Tax Savings
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Total First-Year Tax Savings
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Net Cost After Tax Savings
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Effective Cost per Dollar
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Alternative Minimum Tax (AMT) Warning

High IDC deductions may trigger the Alternative Minimum Tax. IDC expenses in excess of 65% of net oil and gas income are a preference item for AMT purposes. Consult your tax advisor to evaluate your AMT exposure before investing.

Disclaimer: This estimator provides simplified calculations for illustrative purposes only. Actual tax savings depend on your complete tax situation, including AMT exposure, passive activity rules, and at-risk limitations. IDC investments involve substantial risk including potential loss of principal. Past performance does not guarantee future results. Consult your tax advisor.

Interested in IDC Programs?

Let's discuss how IDC investments may fit into your overall tax strategy.

Frequently Asked Questions

Common Questions

What are intangible drilling costs (IDCs)?
IDCs are the non-salvageable expenses of drilling an oil or gas well — labor, fuel, drilling fluids, and site preparation. The U.S. tax code lets investors in qualifying programs deduct a large share of these costs, often in the first year.
How much of an IDC investment is typically deductible in year one?
A significant portion of an investment in a qualifying program is commonly attributable to intangible drilling costs and may be deductible in the first year, with the remainder depreciated over time. Actual percentages vary by program and must be confirmed with your tax advisor.
Who can invest in IDC programs?
Oil and gas drilling partnerships are private placements generally limited to accredited investors. They are speculative and illiquid, involve commodity-price and drilling risk, and can result in loss of principal. This tool provides an estimate only, not tax advice.

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These investments are speculative, illiquid, and involve risk including possible loss of principal; they are available only to verified accredited investors. Distributions are not guaranteed.

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