Montana Overhauls Captive Insurance Premium Tax Code with SB 60

A newly signed law in Montana significantly updates how captive and special-purpose insurers are taxed in the state. Senate Bill 60, introduced by Senator M. Noland at the request of the state auditor, was signed by Governor Greg Gianforte on April 18, 2025. The measure amends Section 33–28–201 of the Montana Code Annotated and will apply to tax years beginning on or after January 1, 2026.

The revised law establishes tiered premium tax rates for both direct and assumed reinsurance premiums. Direct premiums are taxed at 0.4 percent for the first $20 million and 0.3 percent for any amount above that threshold. For assumed reinsurance premiums, the rates are 0.225 percent on the first $20 million, 0.150 percent on the next $20 million, and 0.050 percent on amounts exceeding $40 million. The assumed premium tax does not apply to amounts already taxed as direct premiums or to certain transactions within affiliated groups.

All captive insurers must pay at least a $5,000 annual minimum tax, unless they are newly authorized or surrender their license during the year. In those cases, the minimum is prorated by quarter, ranging from $1,250 to $5,000. The same proration applies in reverse for companies that terminate their authority midyear.

The law treats protected cells and series members of special-purpose captive insurers as distinct for tax assessment. While each protected cell is subject to its own minimum tax, series within a series limited liability company are aggregated to determine the minimum tax liability. However, these structures are not subject to the $100,000 tax cap that otherwise applies to stand-alone captives.

Entities under common ownership and control—defined as 80 percent or more direct or indirect ownership of voting stock by the same shareholder or shareholders in the case of stock companies, or 80 percent or more of the surplus and the voting power of the mutual insurer by the same member or members—are taxed on a combined basis.

Also included in the new framework are provisions clarifying that only the branch business of a branch captive is subject to premium tax. Additionally, taxes must be calculated annually, with premiums from multiyear contracts prorated for the applicable tax year.