Property/casualty insurance companies are subject to state premium taxes. Since at least the mid-19th century, premiums have been subject to state taxation in the United States. In addition to premium taxes, insurance companies are obligated to pay certain statutory fees for services performed by state insurance departments. Insurers are also subject to assessments because they are mandated to participate in guaranty associations, wind pools, FAIR plans, and other residual market mechanisms.
Some states subject insurers to state income tax in addition to premium tax; in many of these states an off-set is set up either allowing credit for income tax payments against premium taxes or vice versa. Other states require premium tax in place of income and franchise tax because premium tax is based on a gross measure, not profit or earnings.
Insurance companies who do business in states other than their domiciliary state are subject to retaliatory taxes from those non-domiciliary states. The purpose of a retaliatory tax is to require foreign (non-domiciliary state) insurers to pay an equal amount of tax to the retaliatory state which would be imposed by the foreign insurer’s state of domicile on foreign insurers.
Many states allow for the off-set of assessments paid to guaranty funds and other residual market mechanisms. Insurers are allowed to deduct a percentage of the assessment, which varies state-to-state, from the premium taxes payable. It is important that laws which provide offsets or credits against premium taxes specifically recognize that such offsets or credits will be granted by the taxing authority after application of premium tax retaliatory laws.
Property/casualty insurance companies are heavily taxed; therefore, NAMIC opposes efforts by state legislators to raise premium taxes on property/casualty insurance companies, and supports efforts to reduce the taxes paid by insurers in a given state.
May 2, 2017 As the May 5 adjournment date for the 2017 Florida General Assembly draws near, the fate of several high-profile insurance issues is in... Read more
March 31, 2017 The House of Representatives Insurance: Property & Casualty Committee pulled NAMIC-opposed HB 3078 from its planned hearing on March 29 after extensive education efforts by... Read more
March 27, 2017 The Senate Appropriations Committee could debate soon the repeal of the insurance industry’s decades-old premium tax credit for employing Floridians... Read more
March 22, 2017 House Bill 1278, concerning deposit of premium tax into local fire fighter safety and disease prevention fund, has been introduced and assigned to the House Local Government... Read more
March 21, 2017 The Florida Senate Appropriations Subcommittee on Finance and Tax amended and approved SB 378, which would repeal the insurance industry's premium tax employment credit. The bill is sponsored by... Read more