Insurance companies in Kansas will pay a reduced surplus lines tax rate beginning next year after the legislature passed a law lowering the surplus tax rate from 6% to 3% for tax years 2024 and after.
Kansas insurance Commissioner Vicki Schmidt released guidance to insurance companies on how the reduced surplus tax rate will be implemented. The new rate of 3% will apply to policies effective on or after January 1, 2024, and to any endorsements. All new and renewal policies effective prior to January 1, 2024, and any subsequent endorsements on those policies will still be taxed at the original rate of 6% to those policies.
The Kansas Insurance Department provided examples of how the tax rate will be applied.
Example One: The tax rate for a policy with an effective date of 10/01/2023 is 6% of the total gross premium. An additional premium endorsement to this policy with an endorsement effective date of 06/01/2024 is also 6%. If a cancellation takes place with an effective date of 08/01/2024, the credit is 6% of the returned premium.
Example Two: The tax for a policy with an effective date of 01/01/2024 is 3% of the total gross premium. An additional premium endorsement to the policy with an endorsement effective date of 06/01/2024 is also 3%. If a cancellation takes place with an effective date of 08/01/2024, the credit is 3%.
Under current law, licensed agents are required to collect and pay to the Commissioner a tax of 6% on the total gross premiums charged, less any return premiums. Lawmakers this year passed HB 2090, which lowers the rate to 3%.
Source: Kansas Insurance Department
Was this article valuable?
Here are more articles you may enjoy.
Marsh McLennan Agency to Buy Fisher Brown Bottrell for About $316M 
JPMorgan Client Who Lost $50 Million Fortune Faces Court Setback 
4,800 Claims Handled by Unlicensed Adjusters in Florida After Irma, Lawsuit Says 
Ban on Worker Noncompetes Faces Uphill Legal Battle 
