Montana modernises captive tax regime

Montana has enacted Senate Bill 60 (SB 60), introducing significant reforms to the state's taxation of captive insurance companies.

Signed into law by Governor Greg Gianforte on 8 May 2025, SB 60 introduces a tiered premium tax structure for captive insurers, replacing the previous flat-rate system.

Under the new framework, direct premiums are taxed at 0.4 per cent on the first US$20 million and 0.3 per cent on amounts exceeding that threshold.

Assumed reinsurance premiums are taxed at 0.225 per cent on the first US$20 million, 0.15 per cent on the next US$20 million, and 0.05 per cent on amounts above US$40 million.

The legislation removes the US$100,000 annual tax cap for protected cell and special purpose captive insurers, while maintaining it for other captive entities.

A minimum annual tax of US$5,000 is instituted, with prorated amounts applicable based on the quarter in which a company is authorised or surrenders its licence.

SB 60 clarifies that captive insurers under common ownership and control will be taxed as a single entity, promoting fairness and consistency in tax obligations.

The revised tax provisions will apply to tax years beginning after 31 December 2025, allowing companies time to adjust to the new framework.

Since 2001, Montana has licensed over 700 captive insurance companies, which have collectively contributed more than US$20 million in premium tax revenues.