The bill establishes a new taxation framework for hydrogen production in Wyoming, specifically addressing the severance tax applicable to this sector. It defines "hydrogen" and "hydrogen production," with the latter referring to the separation of hydrogen from water sourced from the ground. The bill mandates that the Department of Revenue will assess the fair market value of hydrogen production annually for taxation purposes. A severance tax will be levied on the gross product extracted from hydrogen production, with specific tax rates set at three percent for hydrogen produced from by-product water and six percent for all other hydrogen produced from water. The bill also incorporates existing provisions related to natural gas taxation, compliance, enforcement, and taxpayer remedies.

The act will take effect on July 1, 2024, and will apply to any hydrogen production occurring on or after that date. It ensures that the severance tax revenues from hydrogen production will be distributed according to existing laws governing natural gas. Overall, this legislation aims to create a structured tax regime for hydrogen production, promoting the development of this emerging energy sector in Wyoming.