Increases insurance premium tax credit for certain insurance companies to reduce retaliatory tax liability imposed by other states.

A2155

ASSEMBLY, No. 2155

STATE OF NEW JERSEY

222nd LEGISLATURE

�

PRE-FILED FOR INTRODUCTION IN THE 2026 SESSION

Sponsored by:

Assemblywoman ELIANA PINTOR MARIN

District 29 (Essex and Hudson)

SYNOPSIS

���� Increases insurance premium tax credit for certain
insurance companies to reduce retaliatory tax liability imposed by other
states.

CURRENT VERSION OF TEXT

���� Introduced Pending Technical Review by Legislative
Counsel.

��

An Act
increasing the insurance premium tax credit for certain
insurance companies to reduce the retaliatory tax liability imposed by other
states and amending P.L.1945, c.132.

����
Be It
Enacted
by the Senate and General Assembly of
the State of New Jersey:

���� 1.� Section 2 of P.L.1945,
c.132 (C.54:18A-2) is amended to read as follows:

���� 2.� (a)� The tax specified in
subsection (a) of section 1 of this act, except as to life insurance companies
and except as to marine insurance as described by chapter 16 of Title 54 of the
Revised Statutes, shall, except as hereinafter provided, be 2% upon the taxable
premiums collected by such company during the year ending December 31 next
preceding on all business of the company in this State, less the amount of
taxes on its property, exclusive of taxes on real estate and of taxes payable
pursuant to this section, paid in this State by the company pursuant to any law
of this State during the said year.� Any taxes paid to the treasurer of any
firemen's relief association of this State pursuant to R.S.54:18-1 shall be
considered a part of the tax payable under this act.� An additional tax of 0.1%
upon such taxable premiums of such insurers shall also be paid.

���� (b)� Taxable premiums,
collected after December 31, 1965 by an insurance company subject to the
provisions of subsection (a) hereof under group accident and health insurance
policies on residents of this State, and taxable premiums collected under legal
insurance policies as defined in section 3 of P.L.1981, c.160 (C.17:46C-3) on
residents of this State, shall be subject to tax at the following rates:

�

����������� As to taxes payable in
1967����������������������������� 1 3/4 %

����������� As to taxes payable in
1968����������������������������� 1 1/2 %

����������� As to taxes payable in
1969����������������������������� 1 1/4 %

����������� As to taxes payable in
1970 through 2008�������������� 1%

����������� As to taxes payable in
2009������������������������������� 1.35%

����������� As to taxes payable in
2010 and thereafter������������� 1%

�

���� An additional tax of 0.05%
upon such taxable premiums of such insurers shall also be paid.

���� (c)�� For the filing pursuant
to subsection (a) of section 1 of P.L.1945, c.132 (C.54:18A-1) due on or before
March 1,
[
2014
]

2024

and each filing thereafter, every domestic insurance company subject to this
section shall be allowed to reduce the amount owed pursuant to this section by
[
5%
]

90%
of
any retaliatory tax liability incurred by that insurance company for the same
filing period pursuant to the laws of any other state in which the insurance
company transacts business.�
[
Such
percentage reduction shall increase 1% per annual filing, until reaching 15% of
any retaliatory tax liability for the filing due on or before March 1, 2024 and
each year thereafter.
]

(cf: P.L.2010, c.21, s.2)

���� 2.� Section 3 of P.L.1945,
c.132 (C.54:18A-3) is amended to read as follows:

���� 3.��� Amount of tax, life
insurance companies; additional tax.� (a) The tax specified in subsection (a)
of section 1 of this act as to life insurance companies, shall, except as
hereinafter provided, be 2% upon the taxable premiums collected by the company
during the year ending December 31 next preceding under all policies or
contracts of insurance on residents of this State, less the amount of taxes on
its property, exclusive of taxes on real estate and of taxes payable pursuant
to this section, paid in this State by the company pursuant to any law of this
State during the said year.� An additional tax of 0.1% upon such taxable
premiums of such insurers shall also be paid.

���� (b)� Taxable premiums,
collected after December 31, 1965 by an insurance company subject to the
provisions of subsection (a) hereof under group accident and health insurance
policies on residents of this State, and taxable premiums collected under legal
insurance policies as defined in section 3 of P.L.1981, c.160 (C.17:46C-3) on
residents of this State, shall be subject to tax at the following rates:

�

����������� As to taxes payable in
1967������������������� 1 3/4%

����������� As to taxes payable in
1968������������������� 1 1/2%

����������� As to taxes payable in
1969������������������� 1 1/4%

����������� As to taxes payable in
1970 through 2008��� 1%

����������� As to taxes payable in
2009�������������������� 1.35%

����������� As to taxes payable in
2010 and thereafter��� 1%

�

���� An additional tax of 0.05%
upon such taxable premiums of such insurers shall also be paid.

���� (c)�� For the filing pursuant
to subsection (a) of section 1 of P.L.1945, c.132 (C.54:18A-1) due on or before
March 1,
[
2014
]

2024

and each filing thereafter, every domestic insurance company subject to this
section shall be allowed to reduce the amount owed pursuant to this section by
[
5%
]

90%
of
any retaliatory tax liability incurred by that insurance company for the same
filing period pursuant to the laws of any other state in which the insurance
company transacts business.�
[
Such
percentage reduction shall

increase 1% per annual filing,
until reaching 15% of any retaliatory tax liability for the filing due on or
before March 1, 2024 and each year thereafter.
]

(cf: P.L.2010, c.21, s.3)

���� 3.� This act shall take effect
immediately.

STATEMENT

���� This bill amends the insurance
premiums tax to increase the insurance premiums tax retaliatory tax credit to
90 percent instead of the current 15 percent,
to
reduce retaliatory tax liability imposed by other states
.

���� A retaliatory tax is an
additional tax imposed by a state on out-of-state insurance companies operating
in its jurisdiction.� A state charges the retaliatory tax in exactly the same
way that the out-of-state insurance company�s home state taxes domestic insurance
companies operating within its borders.� The retaliatory tax credit in the
statutes being amended in this bill allows a domestic insurance company to
reduce its New Jersey tax liability by a portion of the retaliatory tax
incurred in other states.

���� Under the current statutes,
beginning with the 2013 tax return due on or before March 1, 2014, a domestic
insurance company could reduce its insurance premiums tax liability by 5
percent of any retaliatory tax incurred for the same filing period.� In each
subsequent year the percentage reduction was increased an additional 1 percent
until it reached a statutory scheduled 15 percent for the 2023 return due on or
before March 1, 2024, and for each annual return thereafter.

���� This bill will increase the
credit calculation from 15 percent of any retaliatory tax for the 2023 return
to 90 percent of any retaliatory tax for the 2024 return and will enhance New
Jersey as a competitive marketplace with states that have a lower insurance
premium tax rate or a higher insurance premium tax credit for retaliatory tax
paid by insurance businesses, like New York.� The regressive nature of the
"retaliatory tax" may also deter domestic insurers from domiciling in
New Jersey, while a more generous New Jersey insurance premiums tax credit may
encourage insurers� relocation to New Jersey.