Montana is changing how it taxes captive insurance companies. A new law signed by Gov. Greg Gianforte replaces the flat-rate system with a tiered premium tax model and sets minimum yearly taxes.
Direct premiums will now be taxed at 0.4% for the first $20 mn. Any amount above that will be taxed at 0.3%. Companies must pay these taxes to the insurance commissioner by March 1 each year. The law takes effect on December 31.
Reinsurance premiums will also be taxed using a tiered structure. The first $20 mn will be taxed at 0.225%, the next $20 mn at 0.150%, and any amount above that at 0.05%.
Captive insurers will now pay a minimum tax of $5,000 each year. If a company receives or gives up its certificate of authority partway through the year, the tax will be prorated based on the quarter.
The $100,000 cap on total taxes from captive insurers remains in place. However, this cap does not apply to protected cell captives or special purpose captives with members grouped under a series LLC. The new law makes sure the cap exclusion covers those series LLCs as well.
A state review shows only one series LLC captive reached the $100,000 cap since 2022. No others are expected to reach it between 2026 and 2028.
Although the changes won’t bring in extra money in 2026, the state expects to gain $253,280 in 2027 and $405,680 by 2029. The law is not expected to cost the state anything.
