Bill Text: NJ A2072 | 2024-2025 | Regular Session | Introduced
Bill Title: Increases insurance premium tax credit for certain insurance companies to reduce retaliatory tax liability imposed by other states.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced) 2024-01-09 - Introduced, Referred to Assembly Financial Institutions and Insurance Committee [A2072 Detail]
Download: New_Jersey-2024-A2072-Introduced.html
STATE OF NEW JERSEY
221st LEGISLATURE
PRE-FILED FOR INTRODUCTION IN THE 2024 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.
