Insurance Premium Tax
Cities of all classes may impose license fees or taxes upon insurance companies for the privilege of engaging in the insurance business. The insurance premium tax is based on lives or property insured within the city limits. Types of insurance that may be taxed include fire and allied perils, casualty liability, vehicle, inland marine, health and life. All other risks may be taxed as well, and a city may require a minimum fee (such as $5.00) to be met per line of insurance. Certain premiums are exempt from the tax, such as policies for high-deductible health plans and health insurance policies issued to individuals.
Cities may impose an insurance premium tax to be effective on July 1 each year. Cities must send the Commissioner of Insurance a copy of any changes to the insurance premium tax rates no later than March 23 of each year to be effective the following July 1. Rates may not be changed within a given fiscal year.
- FY 2013 City Insurance Premium Tax Rates (Excel)
- FY 2014 City Insurance Premium Tax Rates (Excel)
- KLC Research Report: Today's Kentucky City - A Comprehensive Analysis of City Operations (link)
- KLC Research Report: The Basics of Kentucky Cities (PDF)
- COTC Learning Opportunities (link)
- KLC Legal FAQ: What do I need to know about Insurance Premium Taxes? (link)
- Chapter 15 of the City Officials Legal Handbook (link)
- KRS 91A.080 (link)