Tax Guide for Insurance Tax
Getting Started

Application of Tax

Insurers

The taxes on insurers are annual taxes imposed on insurance companies doing business in California. Insurers may be subject to as many as three insurance taxes in California:

  • Tax on gross premiums – A tax on gross premiums or business income.  The basis for the tax is a percentage of gross premiums, less returned premiums, received by the insurer on business done in California. (RTC 12221.) Gross premiums do not include premiums received for ocean marine insurance. For insurers transacting title insurance, the basis of the tax is based on California business income. (RTC 12231.)
  1. The insurance gross premiums tax imposed by the California Constitution, Article XIII, section 28, is an annual tax imposed on each insurer doing business in California. The California Department of Tax and Fee Administration (CDTFA) assesses the tax on behalf of the Board of Equalization (BOE) through an interagency agreement. The tax imposed on insurers by Section 28 is jointly administered by the CDTFA, BOE, CDI and the State Controller's Office (SCO), under RTC Part 7 of Division 2.
  • Retaliatory tax – A retaliatory tax is imposed on an out-of-state insurer if the insurance company is domiciled in another state which imposes higher taxes and fees on a California-domiciled insurer for the same business. When the home state does this, a retaliatory tax in the amount of the difference is assessed against the out-of-state insurer. (Cal.Const., Art. XIII, section 28, subd. (f)(3); Ins. Code 685).
  • Ocean marine tax – An ocean marine tax is applicable to insurers transacting the business of ocean marine insurance in California. The basis of the tax is measured by a portion of the underwriting profits. (RTC 12103.)

Application of Tax on Surplus Line Brokers

Surplus Line Brokers, are licensed brokers that sell policies for non-admitted (non-licensed) insurance companies. Non-admitted insurance companies are insurers that are not licensed or admitted to conduct insurance business in California. Surplus line brokers also pay an insurance tax of three percent (3.00%).

For more information about taxes on insurers, please contact the CDI at 1-800-927-4357 or visit www.insurance.ca.gov/.

Registration

There is no online registration process for Insurers and Surplus Line Brokers with the CDTFA. The California Department of Insurance (CDI) notifies the CDTFA of new registrations.

Insurers are required to register with and receive a Certificate of Authority from the CDI to transact insurance business in California.

Surplus Line Brokers should contact the CDI directly for specific registration and licensing requirements.

To register, please visit the CDI website or contact them at 1-800-927-4357 for information on registration and licensing requirements. Tax forms and payment instructions are available on the CDI website.

Tax Rates

The rate of tax on insurance varies by the type of insurance.

For detailed information regarding rates, contact the California Department of Insurance at 1-800-927-4357 or visit the CDI.

Return and Payment

All insurance tax returns are filed and paid to the California Department of Insurance (CDI). The CDI then forwards the payments to the SCO for posting to insurers' accounts.

  • All insurers – For all insurers, except ocean marine insurers and surplus line brokers, the annual return and payment are due April 1 of the following calendar year. For example, the Calendar Year 2019 return is due on or before April 1, 2020. If applicable, the schedule for retaliatory tax should be filed with the annual return.
  • Retaliatory tax – The schedule for retaliatory tax should be filed with the annual return for all insurers as above.
  • Ocean marine insurers – The return and payment for taxes on ocean marine insurance are due June 15 of the following calendar year. For example, the Calendar Year 2019 return is due on or before June 15, 2020.
  • Surplus line brokers – The return and payment for surplus line brokers are due March 1 of the following calendar year. For example, the Calendar Year 2019 return is due on or before March 1, 2020.

The CDI's Electronic Fund Transfer Program Information Guide provides EFT registration information. For assistance or more information, you may also call 1-916- 492-3288, send an email to eft@insurance.ca.gov, or write to the following address:

California Department of Insurance
Accounting Services Bureau
Attn: Tax Accounting/EFT
300 Capitol Mall, Suite 14000
Sacramento, CA 95814

For more information on return or payment due dates, please contact the CDI at 1-800-927-4357 or visit www.insurance.ca.gov.

CDTFA Assessment Payments

The CDI sends Proposed Deficiency Assessments (PDA) to CDTFA, along with copies of tax returns. Based on these returns, CDTFA team members prepare schedules of tax by insurer for distribution to the CDI and SCO. These schedules are considered to be the initial assessment of tax, as required by RTC § 12412.

Payments for billings issued by the CDTFA should go directly to the SCO.

Payment instructions are provided on the billing. If you are making payment by check, please make your check payable to:

State Controller's Office
Departmental Accounting Office
Insurance Tax Program
P.O. Box 942850
Sacramento, CA 94250-0001