Colorado’s insurance premium tax was enacted in 1913. This tax applies to insurance premiums charged by insurance companies licensed by the state of Colorado and surplus line brokers, who offer policies for insurance companies not licensed in the state of Colorado. Pursuant to HB 21-1311, captive insurance companies that generate the majority of their revenue from sources other than insurance premiums are subject to the state’s income tax, rather than the insurance premium tax. Insurance premium taxes are due March 1st for the preceding calendar year to the Division of Insurance within the Department of Regulatory Agencies.1 Insurance premium tax revenue is subject to the spending and revenue limitations of TABOR.
This tax is imposed on the gross amount of all premiums, and the tax rates vary by the type of insurance company as follows:
Insurance Company Type
Captive insurance company*
Insurance companies with a home office in Colorado**
Other insurance companies not otherwise exempted
Surplus line insurance***
Insurance companies may claim tax credits against the insurance premiums tax for any investment in Certified Capital Companies (CAPCOs), or the Colorado Venture Capital Authority. The total amount of the credits is capped at $200 million and is spread over a ten-year period.2
Revenue from the insurance premium tax is credited to the General Fund for spending on general operations after appropriations to:
- the Division of Insurance Tax Fund to fund division operations (limited to 5 percent of revenue);
- the Wildfire Emergency Response Fund and Wildfire Preparedness Fund, which pays for wildfire prevention and response efforts; and
- the state health insurance affordability enterprise.3
Appropriations are made at the discretion of the General Assembly.
As of 2023, all states except Illinois, Michigan, and Oregon assessed some type of premium tax on insurance companies. Of the three states that do not subject insurance companies to a premium tax,Illinois levies an annual privilege tax on all insurance companies, Michigan companies are subject to the Michigan business tax (if elected), corporate income tax, or retaliatory tax, whichever is greater. Insurers in Oregon are not subject to a premium tax, but pay a corporate excise tax on net income.
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