The purpose of this study is to assess the impact of tax expenditures carried by the state in form of tax incentives for the fuel and energy sector on stimulating the innovative development of the oil-producing regions of the Russian Federation. This study applied the cluster analysis using Ward method to the 32 oil producing regions of Russia with regards to 7 innovation indicators and 5 indicators representing types of tax incentives. The study of the impact of tax incentives on mineral extraction tax for the companies which at the same time represent state tax expenditures is important in the context of innovative development of the oil-producing regions of Russia. Mineral extraction tax incentives are determined by the degree of depletion of oilfield, the complexity of extraction and other production and regional factors. Providing such incentives can encourage companies interested in increasing production to conduct research and development studies and introduce innovations in the field development process. Based on the results of clustering of oil producing regions, two groups with high and low innovation potential were identified in terms of the impact of tax expenditures on their innovative development. Each group included two clusters with high and medium tax expenditures and medium and low tax expenditures, respectively. Results proved that, on average, regions with high state tax expenditures have higher values of innovation indicators. However, consideration of a wide range of innovative indicators revealed the unevenness of innovative development, when even leading regions can lag behind in certain indicators.