Montana overhauls captive insurance tax structure with new law

The Governor of Montana, Greg Gianforte, has signed into law Senate Bill 60, which affects captive insurers in the state.

The bill revises the tax structure for captive insurers in Montana, modifying how captive insurers calculate and pay taxes on premiums, introducing a tiered tax rate system where different percentages apply to different levels of premium collections. 

Specifically, for direct premiums, insurers will pay 0.4% on the first $20 million and 0.3% on subsequent dollars, while reinsurance premiums will be taxed at 0.225% on the first $20 million, 0.150% on the next $20 million, and 0.050% on additional dollars. The bill maintains a $5,000 minimum annual tax, with prorated amounts for companies authorized or surrendering their authority during a calendar year. 

A significant change is the modification of the maximum tax cap, removing the $100,000 limit for protected cell and special purpose captive insurance companies, while maintaining it for other types. The bill also clarifies that companies under common ownership will be taxed as a single entity, and the tax calculations will be done on an annual basis, even for multi-year policies. 

The new tax provisions will apply to tax years beginning after December 31, 2025.

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