Some states assess a tax on annuity premiums. Here’s how it works, when it applies, and what it means for your returns.
What Is Premium Tax?
Premium tax is a state-level tax assessed on insurance premiums. For annuities, some states apply this tax at purchase or deduct it from contract value. Carriers may reflect premium tax in the contract values or fees.
When Does It Apply?
- Varies by state and product type.
- May differ for qualified vs non-qualified annuities.
Check your state rules and carrier disclosures.
State-by-State Overview
For official contacts and references, see:
How Carriers Apply Premium Tax
- Deducted from premium or contract value.
- Shown in issue statements or contract pages.
Always review your illustration and policy for premium tax disclosures.
Planning Tips
- Compare net rates after premium tax.
- Consider product design differences and surrender schedules.
- Ask for state-specific disclosures before purchase.
Frequently Asked Questions
Which states charge annuity premium tax?
It varies by state. For official contacts and references, see the State insurance departments directory and State guaranty associations.
Does premium tax reduce my credited rate?
Premium tax doesn’t change the declared rate, but it can reduce your contract value at purchase or be deducted from values, affecting your net return.
Do qualified annuities have premium tax?
Some states treat qualified and non-qualified annuities differently. Review your state rules and carrier disclosures before purchase.
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