IRS raises 831(b) limit
The Internal Revenue Service (IRS) has raised the annual premium limit for microcaptives looking to take the 831(b) tax election.
The IRS made the announcement in Rev. Proc. 2025-32, which was published on the IRS’s website yesterday, October 9, 2025.
In the document the IRS said: “For taxable years beginning in 2026, under § 831(b)(2)(A)(i) the amount of the limit on net written premiums or direct written premiums (whichever is greater) is $2,900,000 to elect the alternative tax for certain small companies under § 831(b)(1) to be taxed only on taxable investment income.”
The previous limit was $2.85 million.
In recent years the IRS has brought a number of court cases involving 831(b)s, which have sharpened interest in microcaptives and led to a great deal of debate on the motivations of the IRS in bringing in these legal cases.
A number of microcaptives are also under review by the IRS, with some in the industry warning that a backlog is building up that could take many years to clear. [https://www.captiveinternational.com/navigating-the-831b-quagmire]
Did you get value from this story? Sign up to our free daily newsletters and get stories like this sent straight to your inbox.
