IRS Increases Section 831(b) Premium Limit to $3 Million for 2027

The Internal Revenue Service (IRS) has increased the premium limit for insurance companies electing taxation under Section 831(b) of the Internal Revenue Code to $3 million for taxable years beginning in 2027, up from $2.9 million in 2026.

The increase was announced in Revenue Procedure 2026–35, issued November 5, 2026, which establishes inflation-adjusted amounts for various provisions of the Internal Revenue Code. The Section 831(b) adjustment is outlined in Section 3.38 of the procedure.

Under Section 831(b), qualifying small insurance companies, including certain captive insurance companies, may elect to be taxed only on their taxable investment income rather than their underwriting income. According to the IRS, the $3 million threshold applies to net written premiums or direct written premiums, whichever is greater.

The premium limit is adjusted annually for inflation. Insurance companies must also meet other applicable requirements to qualify for the Section 831(b) election.