- General Information (G.S. 105-228.5 and 105-228.8)
North Carolina levies several types of insurance premium tax upon
insurers, both domestic and foreign, for the privilege of engaging
in insurance business. Foreign insurers are subject to retaliatory
- Insurance Companies Subject to the
Tax (G.S. 105-228.3)
Article 65 corporations (hospital, medical, and dental service
corporations), insurers and self-insurers are subject to various
types of insurance premium tax.
- Tax Basis (G.S. 105-228.5)
The tax imposed on an insurer shall be measured by gross premiums
from business done in this State during the calendar year. Finance
charges are included in gross premiums.
- Types of Tax and Charges (G.S. 105-228.5,
58-84-1 and 58-6-25)
There are several types of insurance premium tax applied, according
to the type of insurance company and the type of insurance written.
Gross and Retaliatory Premium Tax, Additional Statewide Fire and
Lightning Tax, and Additional Local Fire and Lightning Tax are
types of insurance premium tax reported. Tax rates, according
to the type of insurance written, apply to each type of tax. Printed
returns are generated from a computer program provided by the
NC Department of Revenue. Printed returns and the completed diskette
provided by the Department must be submitted. Other sources of
the computer program, if used, must obtain prior approval.
Insurers, Article 65 corporations, health maintenance organizations,
and self-insurers are required to pay an Insurance Regulatory
Charge in addition to all other fees and taxes. For insurers and
self-insurers, the Insurance Regulatory Charge is a percentage
of the gross premium tax liability, exclusive of any additional
taxes imposed by G.S. 105-228.8, any credits allowed under G.S.
105-228.5A or G.S. 97-133(a), and any other credits allowed under
Chapter 105 of the General Statutes, for the taxable year. For
Article 65 corporations and health maintenance organizations,
the Insurance Regulatory Charge is a percentage of a presumed
tax liability for the year calculated as if the corporation or
organization were an insurer providing health insurance. The same
exclusions apply for Article 65 corporations and health maintenance
organizations that apply for insurers and self-insurers.
- Tax Rates and Charges (G.S. 105-228.5 and
Tax rates and charges are as follows:
|Other insurance contracts
|Additional Statewide Fire and Lightning (excluding auto
| Additional Local Fire and Lightning
|Article 65 Corporations
|Insurance Regulatory Charge (2001)
*Subject to change each year and is established by the General
Assembly based on a proposed percentage rate submitted by the
NC Department of Insurance sufficient to defray the estimated
cost of the operations of the NC Department of Insurance for each
upcoming fiscal year.
- Retaliatory Provisions (G.S. 105-228.8)
When the laws of any other state impose, or would impose, any
premium taxes, upon North Carolina companies doing business in
the other state that are, on an aggregate basis, in excess of
the premium taxes directly imposed upon similar companies by the
statutes of this State, the Secretary of Revenue shall impose
the same premium taxes, on an aggregate basis, upon the companies
chartered in the other state doing business or seeking to do business
in North Carolina. Retaliatory tax is reported and paid with the
annual Gross Premium Tax return. Special purpose obligations or
assessments based on premiums imposed in connection with particular
kinds of insurance, the special purpose regulatory charge and
dedicated special purpose taxes based on premiums are excluded
from retaliatory computations. Seventy-five percent (75%) of the
Additional Statewide Fire and Lightning tax is included in the
- Installment Payments (G.S. 105-228.5(f))
Insurers, Article 65 corporations and self-insurers that have
a premium tax liability, not including the additional local fire
and lightning tax, of ten thousand dollars or more for business
done in North Carolina during the immediately preceding year must
remit three equal installments with each installment equal to
at least thirty-three and one-third percent (33 1/3%) of the premium
tax liability incurred in the immediately preceding taxable year.
Any insurer, corporation, self-insurer, or organization required
to make premium tax installments, must also make installment payments
of the Insurance Regulatory Charge. Each installment of the Insurance
Regulatory Charge must be at least thirty-three and one-third
percent (33 1/3%)of the Regulatory Charge for the immediately
preceding taxable year. The installment payments are due on or
before April 15, June 15 and October 15 of each taxable year.
The balance of tax due is remitted by the following March 15 along
with the annual tax return. The Secretary of Revenue may permit
an Insurance company to pay less than the required installment
amount when the insurer reasonably believes that the total estimated
payments made for the current year will exceed the total anticipated
tax liability for the year. An underpayment of an installment
payment shall bear interest.
- Due Dates (G.S. 105-228.5(e))
Annual returns along with payment of tax are due on or before
March 15 of each year. Installment returns (if required) along
with payment of tax are due on or before April 15, June 15, and
October 15 of each year.
- Electronic Funds Transfer (EFT) Requirement
(G.S. 105-241 and 105-236(lb))
Insurance companies paying premium tax of $240,000 or more in
a fiscal year are required to remit this tax by EFT beginning
with payments made in the following calendar year. Insurance companies
will be notified by the Department if required to make EFT payments.
Payments received in the wrong form are subject to a penalty equal
to 5 percent of the tax. For additional information on EFT, refer
to the subject, "Payments of Tax by EFT" under "General
- Exempt Insurance Companies (G.S. 105-228.5(g))
The insurance premium tax requirements do not apply to farmers'
mutual assessment fire insurance companies, to fraternal orders
or societies that do not operate for a profit and do not issue
policies on any person except members or to health maintenance
organizations. Effective January 1, 2003, health maintenance organizations
will be subject to insurance premium tax.
- Exclusions (G.S. 105-228.5)
The following premiums may be excluded when computing a taxable
- Premiums properly reported and properly allocated as being
received from business done in some other nation, territory,
state, or states.
- Premiums from policies written in federal areas for persons
in military service who pay premiums by assignment of service
- Premiums from policies or contracts issued in connection
with the funding of a pension, annuity, or profit-sharing
plan qualified or exempt un section 401, 403, 404, 408, 457
or 501 of the IRS Code.
- Premiums or considerations received from annuities, as defined
in G.S. 58-7-15.
- Funds or considerations received in connection with funding
agreements, as defined in G.S. 58-7-16.
- Medicaid or Medicare premiums, to the extent federal law
prohibits their taxation.
- Tax Credits (G.S. 105-228.5A, 97-29.1, 105-129.16B,
Article 3A of Chapter 105)
- Guaranty Assessment Credits
North Carolina Guaranty Association assessments paid by insurers
may be used as a credit against premium tax. The credit is
20% per year for a period of five years beginning with the
year after payment of the assessment. Applies to all insurance
Guaranty Association and Life and Accident and Health Insurance
Guaranty Association assessments paid. The credit may not
exceed the premium tax liability for the year. Self-Insured
Guaranty Association assessments paid may be applied as a
100% credit for the year in which it is paid.
- Supplemental Workers' Compensation Credits
Supplemental workers' compensation benefits paid to NC residents
may be applied as a credit.
- Tax Incentive Credits
Tax credits provided under Article 3A are allowed to be taken
against gross premiums tax. The Article 3A credits are the
tax incentives for new and expanding businesses. These various
credits can be taken against the gross premiums tax effective
for taxable years beginning on or after January 1, 1999.
- Tax Credit for Low-income Housing
Effective for taxable years beginning on or after January
1, 2001, for buildings placed in service on or after that
date, the tax credit for low-income housing may be taken against
gross premium tax. See "Credit for Low-income Housing"
in the "Credits" section for further information
about this credit.
- Insurance Tax Administered by Department
of Insurance (G.S. 105-228.9)
Surplus lines tax, tax on risk retention groups not chartered
in the State, and tax on persons procuring insurance directly
with an unlicensed insurer are still administered by the NC Department
of Insurance. Licensing and filing fees of insurers are also administered
by the NC Department of Insurance along with the financial reporting
requirements for insurers.
- No Additional Local Taxes (G.S. 105-228.10)
No county, city, or town shall be allowed to impose any additional
tax, license, or fee, other than ad valorem taxes, upon any insurance
company or association paying the fees and taxes levied under
the insurance premium tax statutes.
- Exemption From Franchise or Corporate Income
Tax (G.S. 105-228.5(a))
An Insurer or Article 65 corporation that is subject to the insurance
premium tax is not required to file or pay franchise or corporate