Surplus Lines Tax Rates by State (2026)

Surplus lines tax is a state tax on the premium of a policy placed with a non-admitted insurer. In 2026 the rate runs from 0.925% in Iowa to 6% in Alabama, Oklahoma and South Carolina, and it is always the rate of the insured's home state. The licensed surplus lines broker collects it from you as a separate line on the invoice and pays it to the state, and many states add a small stamping or transaction fee on top.

The tax cannot be negotiated. The broker cannot discount it or choose a cheaper state: federal law sets the home state as the only state that taxes the policy, wherever the risk sits. Some states stack more than one charge on the same premium. Kentucky, for example, adds a 1.8% surcharge and local government premium taxes to its 3% base rate.^[6]

What is surplus lines tax?

Surplus lines tax is the premium tax a state charges when coverage is placed with a non-admitted insurer in the surplus lines market. A licensed (admitted) insurer pays premium tax to the state directly as a condition of its license. A non-admitted insurer has no license in your state, so the state cannot tax the insurer. It taxes the transaction instead and makes the licensed surplus lines broker collect and remit the tax on every placement.

The tax is a fixed percentage of premium, and each state sets its own rate by statute. Most states fall between 2% and 5%. Some add a second layer: South Carolina's 6% is a blend of a 4% state tax and a 2% municipal tax,^[7] Kentucky adds local taxes to its base, and several states charge extra on fire coverage. The tax applies to the policy premium and, in most states, to additional premium from later endorsements and audits at the rate that applied when the policy started.

If your business needs coverage that admitted carriers won't write, Menlo places it through the excess and surplus lines market, and every quote shows the tax and fees as their own lines.

Who pays surplus lines tax?

The insured pays the surplus lines tax, but the broker sends it to the state. The licensee who placed the policy is the taxpayer of record. Your invoice shows the premium, then the surplus lines tax, then any stamping or transaction fee. The licensee files the policy with the state or its stamping office and pays the tax on the state's schedule, which is monthly, quarterly or yearly depending on the state.

That licensee is usually not the retail agent you deal with. On most placements the wholesale broker that reached the insurer holds the surplus lines license and makes the filing. The money moves from your invoice to the retail agent, then to the wholesaler, then to the state. A quote often shows "taxes and fees" as one figure, and the invoice after binding shows how it splits.

If a surplus lines quote has no tax line, ask why. The tax is not optional, and a late payment costs the filing broker real money: in California, unpaid tax draws a 10% penalty plus 1% interest per month until it is paid.^[1] For background on why these policies are regulated differently, see admitted and non-admitted carriers.

How do you calculate surplus lines tax?

Multiply the premium by your home state's tax rate, then add any stamping or transaction fee, calculated the same way. That is the whole formula, which is why most stamping offices publish rate tables rather than calculators.

The two common mistakes are the wrong state and the wrong date. The rate comes from the insured's home state, not the state where the property or operation is. And fees follow the policy's effective date, not the date the broker files it. In Florida, for example, a policy that starts before July 1, 2026 keeps the old 0.06% service fee even if it is filed after that date.^[8]

Here is the math on a California placement:

The taxable base also differs by state. Some states tax broker fees and inspection fees as part of the premium and others do not, so two otherwise identical policies can have slightly different tax bills. The broker's filing system applies each state's definition, but on a large placement it is worth confirming what the base includes.

What is a stamping fee?

A stamping fee is a service charge from a state's surplus lines stamping office, a nonprofit that reviews each filing for completeness and compliance. Fifteen states have one: Arizona, California, Florida, Idaho, Illinois, Minnesota, Mississippi, Nevada, New York, North Carolina, Oregon, Pennsylvania, Texas, Utah and Washington.^[4] The fee pays for the office's work, so it is small (0.04% to 0.5% of premium in 2026) and changes separately from the tax rate.

Offices change their fees when their budgets change. Florida's service fee dropped from 0.06% to 0.03% for policies effective on or after July 1, 2026.^[8] Washington's rose from 0.10% to 0.30% for policies starting on or after January 1, 2025.^[9] Oregon and Pennsylvania charge flat amounts instead: $10 and $20 per filing.^[10]

A newer charge works the same way. States that file through the SLIP+ platform charge a 0.175% transaction fee on gross premium: Alabama, Colorado, Kansas, Louisiana, Montana, Oklahoma, South Dakota, Tennessee and Wyoming as of 2026, with Arkansas joining for policies effective on or after January 1, 2027.^[11] A stamping or transaction fee is not a tax, but you pay it the same way, as a line on the invoice.

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

The table lists each state's 2026 surplus lines tax rate and any stamping, transaction or other fee. Rates were checked on September 27, 2026 against the state or stamping office page where one was available (see References), and against WSIA's April 2026 compliance chart^[10] and Troutman Pepper Locke's Excess and Surplus Lines Laws Manual.^[3]

¹ Florida's FSLSO service fee dropped from 0.06% to 0.03% for policies effective on or after July 1, 2026. Policies that started earlier, and endorsements on them, keep the 0.06% fee.^[8]

² Iowa is lowering its rate in steps: 0.925% for 2026, then 0.9% from 2027.^[12]

³ Kentucky's total rate depends on where the risk is: the 3% state tax, a 1.8% surcharge, and a local government premium tax that differs by city and county.^[6]

⁴ Louisiana adopted SLIP+ in LDI Bulletin 2026-03. The 0.175% fee applies to policies and endorsements effective on or after July 1, 2026.^[13]

⁵ Washington's 0.30% stamping fee, up from 0.10%, applies to policies starting on or after January 1, 2025.^[9]

Rates change by law, so treat any table, this one included, as a starting point and confirm with the state or stamping office before quoting a large account.

What are the rates in the biggest surplus lines states?

California, Texas and Florida are the three largest surplus lines states. Stamping offices reported $90.3 billion of premium for 2025, up 7.8% from 2024,^[4] and Texas passed Florida for second place that year.^[14]

• California: 3% tax plus a 0.18% stamping fee.^[1]
• Texas: 4.85% tax plus a 0.04% stamping fee.^[2]
• Florida: 4.94% tax plus the 0.03% FSLSO fee (0.06% for policies that started before July 1, 2026).^[8]
• New York: 3.6% tax plus a 0.15% ELANY stamping fee.^[15]
• Illinois: 3.5% tax plus a 0.04% stamping fee, and a 1% fire marshal tax on the fire portion of property premium.^[16]

Illinois is the one that surprises buyers: it looks like 3.54% until the fire marshal tax is added to a property policy. The spread between states is wide. A Missouri insured pays 5% and a Virginia insured pays 2.25% on the same premium, more than twice as much.

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

Only the insured's home state taxes a surplus lines policy, however many states the coverage touches. The Nonadmitted and Reinsurance Reform Act (NRRA), part of the 2010 Dodd-Frank Act, set this rule.^[17] Before it, a broker placing a multi-state risk split the premium by state and paid each state its share, which caused duplicate and conflicting assessments. Now the home state taxes 100% of the premium and no other state may tax it.

The NRRA also let states agree to share that money through a compact, but neither attempt worked. The NIMA clearinghouse dissolved effective October 1, 2016, after most member states, including Florida, withdrew,^[5][18] and SLIMPACT never reached the ten member states it needed to start. With no compact running, all of the tax stays with the home state.

The home state is where the insured has its principal place of business (a company) or principal residence (a person). If none of the insured risk is in that state, the home state is the state with the largest share of the premium.^[17] So a Texas company insuring warehouses in six states pays Texas's 4.85% tax and 0.04% fee on the whole premium, and moving its headquarters to another state would change the tax on every surplus lines policy it buys.

Why do surplus lines tax rates differ by state?

Rates differ because each legislature sets its own, and most set the surplus lines rate at or near the premium tax admitted insurers pay. That keeps the surplus lines market from having a tax advantage over admitted carriers. States with high admitted premium taxes, such as Alabama and Oklahoma, have 6% surplus lines rates. Iowa has gone the other way and is lowering its rate each year, to 0.9% from 2027.^[12]

The rest of the difference comes from extra charges layered on the base rate for certain lines or places: fire marshal taxes in Illinois and Oregon, Montana's fire tax, Mississippi's 3% windstorm association fee, Kentucky's local premium taxes, and the SLIP+ transaction fee. Two states with the same headline rate can bill different totals once these apply, which is why brokers calculate taxes and fees in their filing software rather than from memory.

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

What to check on your surplus lines invoice

Check three things on a surplus lines invoice: that the tax rate is your home state's, that any stamping or SLIP+ fee matches the policy's effective date, and what the taxable base includes. The tax itself is set by law, runs from 0.925% to 6% of premium in 2026, and cannot be negotiated. On a large account, confirm the rate and the base with the state or stamping office before you accept the quoted total.