Surplus Lines Tax Rates by State (2026)

A surplus lines tax is a state premium tax imposed on insurance policies issued through non-admitted insurance companies. 2026 lists that the rate of this tax can vary anywhere from 0.925% in Iowa to 6% in Alabama, Oklahoma, and South Carolina. The licensed surplus lines agent/broker is responsible for calculating and remitting this tax. It will be included in the total amount billed to the insured as a separate line item. In addition to taxes, many states impose a "stamping" charge. This range is typically between 0.04% to 0.5% and is paid when the policy is filed at a stamping office.

The buyer will always want to reduce this portion of the tax line and cannot. Each additional dollar in the tax line reduces the overall size of the deal. The tax rate is not the broker's to discount, and which rate applies is not the broker's to choose either. Federal Law dictates the application of the home state's tax rate no matter the location of risk. Some states apply multiple charges to the same premium. For example, in Kentucky, there is a 3% base rate and a 1.8% surcharge, as well as municipal taxes that change city by city.

What is surplus lines tax?

Surplus lines tax is the premium tax a state charges when coverage is placed with a non-admitted insurer through the surplus lines insurance market. Here is the logic. A licensed insurer pays premium tax to the state directly, as a condition of its license. A non-admitted insurer holds no license in your state, so the state cannot tax it. The state taxes the deal instead, and makes the licensed surplus lines broker collect and remit the tax on every placement.

The tax is always a fixed percentage of a premium and every state sets their own percentage through legislation. Most states are going to be somewhere in the range of 2% to 5%. There are some states that will have an additional layer of tax. For example, South Carolina has both a State and Municipal Tax Rate. Some states will stack their local taxes onto their base tax, such as Kentucky. Additionally, several states charge more on fire lines. This tax applies to the initial policy premium and, in most states, to endorsement and audit premiums developed later at the same percentage that applied at inception.

Who pays surplus lines tax?

The insured pays the surplus lines tax, but never writes the check to the state. The licensee who placed the policy is the taxpayer of record. Your invoice shows three separate line items: premium, then surplus lines tax, then any stamping fee. The licensee files the policy with the state or its stamping office and sends in the tax on the state's schedule, which is monthly, quarterly, or yearly depending on the state.

The surplus lines licensee that remits the tax on a given policy is usually not the retail agent that sold you the insurance contract. On most deals, the wholesale agent that arranged for the coverage with the carrier has a surplus lines agency license and files with the state. As such, the tax flows from your purchase invoice, through the retail agent, to the wholesale agent, and only then to the State. When you receive a quote it will show "taxes and fees" as a lumped percentage. Once you have bound the policy you will see how those percentages were divided.

If the tax line is missing from a surplus lines quote, ask why. The tax is not optional, and an unfiled placement costs the filing broker real money: California assesses a 10% penalty plus 1% interest per month on late tax payments under the SLA of California's filing rules.^[1] The more common miss in practice is not a forgotten filing but tax remitted to the wrong home state after a headquarters move. For the background, see how admitted and non-admitted carriers are regulated.

How do you calculate surplus lines tax?

Multiply the policy premium by your home state's tax rate, then add the stamping fee, calculated the same way, if your state has one. That is the whole formula, which is why most stamping offices publish rate pages rather than elaborate calculators.

The two traps are using the wrong state and using the wrong date. The rate comes from the insured's home state, not the state where the property or operation sits. And stamping fees key to the policy's effective date, not the date the broker files it, so a policy incepting December 28 and filed January 5 uses December's fee schedule.

Here is the math on a real placement:

Watch your base go through all of its different states. While some states allow for taxing broker fees and inspection fees (premium) while other states do not permit these, two insurance policies that are otherwise identical may have slightly different tax bills. Your broker's filing system will automatically apply the state's definition, but on a large placement it is worth confirming what the taxable base includes.

What is a stamping fee?

A stamping fee is a service charge collected by a state's Surplus Lines Stamping Office, a non-profit that examines all filings to ensure they are complete and compliant with the state prior to the State accepting them. There are fifteen states with their own Surplus Line Stamping Offices, and several "hybrid" models, including SLTX in Texas, the SLA of California, ELANY in New York, FSLSO in Florida.^[2] As this fund pays for all expenses associated with operating these offices, the fees are very low (usually 0.04% to 0.5% of premium) and do not affect or have any relation to the tax rates.

The amounts that stamping offices charge are often tied to budget decisions made by these offices, and this can happen at times during the middle of a decade. For example, Florida's service fee went down from 0.06% to 0.03% for all policies effective as of or after July 1, 2026. Washington's 0.30% increased from 0.10% and will be charged for all policies with an inception date of on or after January 1, 2025. Both Oregon and Pennsylvania do not use percentages (i.e. they simply use a flat amount) and charge $10 and $20 respectively per filing. A stamp fee is not a tax, however it has the same characteristics to the Insured (i.e., the person paying the invoice).

What are the surplus lines tax rates by state in 2026?

The table below contains the surplus lines premium tax rate and the current stamping fee for all 50 states and the District of Columbia. Tax rates are taken from the excess and surplus lines statutes for each state and from the respective offices' fee schedules. These were checked against Troutman Pepper Locke's Excess and Surplus Lines Law Manual,^[3] and reflect the laws in effect as of July 2026:

¹ Florida's FSLSO service fee dropped from 0.06% to 0.03% for policies effective on or after July 1, 2026. Policies incepting earlier, and endorsements on them, keep the 0.06% fee.

² Iowa is phasing its rate down: 0.925% in 2026, then 0.9% in 2027 and after.

³ Kentucky's effective rate varies by locality: the 3% state tax plus a 1.8% surcharge plus local government premium taxes that differ by municipality.

⁴ Louisiana's 0.175% SLIP+ transaction fee, adopted by LDI Bulletin 2026-03, applies to policies and endorsements effective on or after July 1, 2026 and is collected through the SLIP+ platform.

⁵ Washington's 0.30% stamping fee, raised from 0.10%, applies to policies with inception dates on or after January 1, 2025.

Rates change legislatively, so treat any table, this one included, as a starting point and confirm against the stamping office before quoting a large account.

What are the rates in the biggest surplus lines states?

California, Texas, Florida, New York, and Illinois were responsible for the largest shares of the premiums from the 15 state stamping offices in 2025, which added to a total of $90.3 billion in the pool. The pool saw an increase of 7.8% over 2024, per WSIA's annual stamping office report.^[4] Texas surpassed Florida for second place that year. These five states' rates are frequently cited.

Illinois is the one that trips buyers up. Its 3.5% tax and 0.04% SLAI stamping fee read like 3.54% flat until a fire marshal tax of up to 1.0% lands on fire-exposed lines. Texas runs 4.85% plus SLTX's 0.04%, California 3% plus 0.18%, Florida 4.94% plus the FSLSO fee, and New York 3.6% plus ELANY's 0.15%. Outside the top five, a Missouri insured pays 5% while a Virginia one pays 2.25%, more than double the rate on the same premium.

Which state taxes a multi-state policy under the NRRA?

The only state to tax a surplus lines insurance policy is the home state for the insured, regardless of what number of states are involved with the coverage. This is because the federal government created this rule through the Nonadmitted and Reinsurance Reform Act (NRRA) which was part of the Dodd-Frank Act, passed in 2010. Prior to the creation of the NRRA, if a broker placed coverage on a risk in multiple states, then they would split the premiums for those risks by state, pay each state their share and create a chaotic compliance nightmare with often times duplicative or conflicting assessments. The NRRA ended that allocation. The home state gets 100% of the tax on 100% of the premium, and no other state may charge anything.

In addition to that, states were given an alternative method of sharing this money, through authorization of multi-state tax-compact agreements. Neither attempt worked. NIMA collapsed in October 2016 after Florida and Louisiana withdrew from the agreement,^[5] and SLIMPACT was unable to reach its ten member states required for operation. As there are now no remaining compacts in existence, all money remains with the "home" state.

The home state is where the insured maintains its principal place of business (for companies) or their primary residence (for individuals). In situations when no portion of the insurance exposure is located within the home state, the home state is the state which receives the highest percentage of premium. Therefore, although a Texas-based corporation insuring warehouses in six states would pay both 4.85% and 0.04% on the entire premium, simply relocating the corporate headquarters could result in changes to the taxes paid by that corporation on each and every surplus lines insurance contract purchased.

Why do surplus lines tax rates differ by state?

State legislatures set their own rates of premium tax, and most states have fixed theirs at or near the level which admitted insurance companies are charged. Therefore, the surplus lines market will not be able to take a tax advantage over admitted carriers. Some states charge very high premium taxes on admitted insurance (for example, Alabama and Oklahoma) and consequently fix their surplus line premium tax rates at 6%. Other states intentionally attempt to attract businesses by charging as little as possible in order to create competitive environments. For instance, Iowa is phasing down to 0.9% in an effort to recruit new businesses.

The remaining variations are due to layered charges. The fire marshal taxes in both Illinois and Oregon, the fire surcharge in Montana, the 3% windstorm association fee in Mississippi, and the municipal premium taxes in Kentucky all sit atop the base rate for particular lines or localities. Therefore once these charges have been applied as riders, two states with identical headlining rates can bill different totals. That is why brokers quote tax and fees based on filing software and not based upon memory.

This guide is for educational purposes. Tax rates and stamping fees change by statute, and your home state's current filing requirements control. Talk to a licensed broker about your actual exposures.

The Bottom Line

Surplus lines tax is a percentage of premium charged by your home state on coverage purchased from non-admitted carriers. The rates run from 0.925% through 6% in 2026. In addition to these rates, some (about one-third) of the states will also charge a small "stamping" fee. The broker handles filing and remittance of the tax. However, you will be responsible for this cost on your invoices. Additionally, no portion of the tax can be negotiated. On an especially large account, always verify both the applicable rate(s) and the taxable base with the state stamping office prior to accepting the quoted amount.