Legislature Passes Short-Term Premium Tax Relief
As the 2024 legislative session neared its close, the Florida legislature passed temporary premium tax relief on policies covering residential homestead property as part of House Bill 7073 (HB 7073). The bill will result in savings to consumers as the Florida property insurance market continues to adjust to reforms passed in late 2022 and early 2023.
The bill contains a new section 624.5108 to be added to the Florida Insurance Code alongside other provisions related to premium taxes and other assessments. The new statute specifies that an insurer must deduct from the “total amount charged for a policy covering residential property with a homestead exemption,” an amount equal to 1.75 percent of the premium as defined in section 627.403, Florida Statutes. In simpler terms, the new law provides policyholders a premium reduction equal to the premium tax percentage.
The statute applies to policies with effective dates between October 1, 2024, and September 30, 2025. Insurers are required to identify the amount of the deduction on the declarations page.
To establish whether a property is a homestead property, the insurer must use the preliminary or final tax roll, whichever is more current, published by the Florida Department of Revenue on its website. The new statute allows a policyholder who does not receive the premium credit to apply for a refund upon demonstrating to his or her insurer that the property is homestead property.
For premium tax reporting purposes, insurers will continue to report the full policy premium prior to application of the new reduction. Insurers then will be able to take deductions for the full amount of the premium reductions against their premium taxes otherwise payable for 2024 and 2025. An insurer that is not able to fully use its credit in any one tax year may carry the unused portion of its credit forward for five years.
Insurers providing premium reductions under the new law will be required to identify with their quarterly and annual statement filings (i) the number of policies receiving premium reductions for the period covered by the report, and (ii) the dollar amount of reductions provided during the period.