The premium tax rate will drop from 1.75 percent to 1.5 percent under Gov. Malloy’s budget plan.
“Restructuring and lowering the premium tax will substantially improve market conditions for Connecticut-based insurance companies,” said Gov. Malloy in a statement. “This change will save them millions in taxes paid to other states across the country.”
Tax rates on insurance premiums vary across the country, ranging from 0.5 percent up to 4.35 percent. In many states, a retaliatory tax forces insurance companies to pay their home state’s tax rate if it is higher than the tax rate in the state they’re doing business in. For example, Iowa has a premium tax rate of less than 1 percent, but Connecticut-based insurers doing business in Iowa pay 1.75 percent.
If Gov. Malloy’s proposal is approved by the state legislature, the lower premium tax rate would be effective Jan. 1, 2018, according to the report.
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