Bill > A5586

Introduced Session

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.

AI Summary

Committee Categories

Eliana Pintor Marin (D)*, 

Introduced, Referred to Assembly Financial Institutions and Insurance Committee (on 06/08/2023)

Official Document