Surplus Lines Tax Rates by State (2026)

Surplus lines tax is a state premium tax charged on insurance placed with non-admitted carriers, and in 2026 it ranges from 0.925% in Iowa to 6% in Alabama, Oklahoma, and South Carolina. The broker calculates and remits the tax, but the insured pays it as a line item on the invoice. Many states also add a stamping fee, typically 0.04% to 0.5%, collected by a stamping office that reviews surplus lines filings.

If you just received a surplus lines quote, the tax line is not negotiable and it is not your broker padding the bill. Every state sets its own rate, and under federal law the rate that applies is the one in your home state, no matter where the risk sits. This page gives you the full 51-jurisdiction table, a worked calculation, and the rules brokers use to figure out which state gets paid.

Surplus Lines Tax

Surplus lines tax is a percentage-of-premium tax that states charge on coverage bought from insurers not licensed in that state. Because non-admitted insurers pay no state premium taxes themselves, the tax is collected at the transaction level through the licensed broker who places the policy.

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. Licensed, admitted insurers pay state premium taxes directly as part of their license. Non-admitted insurers hold no license in your state, so the state has no way to tax them. Instead, the state taxes the transaction itself and makes the licensed surplus lines broker responsible for calculating, collecting, and remitting the tax on every placement.

The tax is a flat percentage of premium, set by statute in each state. Most states sit between 2% and 5%. A few add extra layers: Kentucky stacks a surcharge and local taxes on its base rate, South Carolina blends a state and municipal rate, and several states charge more on fire lines. The tax applies to the policy premium and, in most states, to endorsement and audit premium developed later at the same rate 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 broker who placed the policy is the taxpayer of record. Your invoice shows premium, then surplus lines tax, then any stamping fee, as separate line items. The broker collects the full amount from you, files the policy with the state or its stamping office, and remits the tax on the state's schedule, which is monthly, quarterly, or annually depending on the jurisdiction.

This matters in two practical ways. First, the tax is not commission and the broker keeps none of it, so there is no negotiating it down. Second, if the tax line is missing from a surplus lines quote, ask why. An unfiled placement exposes the broker to penalties and can leave the insured dealing with a policy that was never properly reported. For the background on why these policies work differently, 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 how the base changes state to state. Some states tax broker fees and inspection fees as premium while others exempt them, so two identical policies can produce slightly different tax bills. Your broker's filing platform applies the state's definition automatically, but on a large placement it is worth confirming what sits inside the taxable base.

What is a stamping fee?

A stamping fee is a service charge collected by a state's stamping office, a nonprofit association that reviews surplus lines filings for completeness and compliance before the state accepts them. Fifteen states plus a handful of hybrid arrangements run stamping offices, including SLTX in Texas, the SLA of California, ELANY in New York, and FSLSO in Florida. The fee funds the office's operations, which is why it is small, usually 0.04% to 0.5% of premium, and why it moves independently of the tax rate.

Stamping offices adjust fees based on their budgets, sometimes mid-decade. Florida's service fee drops from 0.06% to 0.03% for policies effective July 1, 2026 or later. Washington's new 0.30% fee applies only to policies incepting after 2025. Oregon and Pennsylvania skip the percentage entirely and charge flat fees of $10 and $20 per filing. A stamping fee is not a tax, but from the insured's side of the invoice it behaves like one.

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

The table below lists the surplus lines premium tax rate and stamping fee for all 50 states and the District of Columbia, compiled from the state stamping offices and Troutman Pepper Locke's Excess and Surplus Lines Law Manual and verified July 2026:

¹ Florida's FSLSO service fee drops from 0.06% to 0.03% for policies effective on or after July 1, 2026.

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 Washington's 0.30% stamping fee applies to policies with inception dates after 2025.

Stamping fees in every state key to the policy's effective date rather than the filing date, so a rate change like Florida's applies based on when the policy incepts. 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?

Five states account for the bulk of American surplus lines premium, and their rates come up constantly. Illinois charges a 3.5% surplus lines tax plus the 0.04% SLAI stamping fee, plus a fire marshal tax of up to 1.0% on fire-exposed lines, which surprises buyers who expected 3.54% flat. Texas charges 4.85% plus SLTX's 0.04% stamping fee. California charges 3% plus the SLA of California's 0.18%. Florida charges 4.94% plus the FSLSO fee, 0.06% falling to 0.03% for July 2026 and later inceptions. New York charges 3.6% plus ELANY's 0.15%.

Among the other states buyers ask about most, Georgia sits at 4.0%, Virginia at 2.25%, and Missouri, Ohio, and New Jersey all at 5.0%, none with a stamping fee. Virginia is the cheapest of that group by a wide margin. A Missouri insured pays more than double Virginia's rate on the same premium.

Which state's tax applies to a multi-state policy?

Only the insured's home state taxes a surplus lines policy, no matter how many states the coverage touches. That rule comes from the Nonadmitted and Reinsurance Reform Act, the NRRA, passed as part of the Dodd-Frank Act in 2010. Before the NRRA, brokers allocated premium across every state where the risk sat and paid each state its share, a compliance mess that produced inconsistent and sometimes overlapping tax bills. The NRRA ended allocation. The home state gets 100% of the tax on 100% of the premium, and no other state may charge anything.

The home state is where the insured maintains its principal place of business, or for an individual, principal residence. If none of the risk sits in that state, the home state is the state with the largest share of premium. This is why a Texas-headquartered company insuring warehouses in six states pays 4.85% plus 0.04% on the entire premium, and why moving a headquarters can change the tax bill on every surplus lines policy the company buys.

Why do surplus lines tax rates differ by state?

Each state legislature sets its own rate, and most pegged it at or near what admitted insurers pay in premium tax so the surplus lines market would not enjoy a tax advantage over licensed carriers. States with high admitted premium taxes, like Alabama and Oklahoma, carry 6% surplus lines rates. States that compete for insurance business, like Iowa with its phase-down to 0.9%, keep rates low deliberately. Iowa's rate is a recruiting tool.

Layered charges explain the rest of the variation. Fire marshal taxes in Illinois and Oregon, Montana's fire surcharge, Mississippi's 3% windstorm association fee, and Kentucky's municipal premium taxes all ride on top of the base rate for particular lines or localities. Two states with identical headline rates can produce different invoices once those riders apply. That is why brokers quote tax and fees from 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 requirements control. Talk to a licensed broker about your actual exposures.