In insurance premiums tax, further providing for imposition of tax.
Summary
HB1865 amends Pennsylvania’s Tax Reform Code to increase the insurance premiums tax rate imposed on insurance companies doing business in the Commonwealth. Under current law, the tax rate is 2% of gross premiums received from business done within Pennsylvania; this bill raises that rate to 8%. The change applies to calendar years beginning after December 31, 2025, and the act would take effect immediately upon enactment.
The bill is narrowly focused on the state’s taxation of insurance carriers and does not alter insurance coverage rules, consumer protections, or regulatory standards. Its practical effect would be to increase the tax burden on insurers operating in Pennsylvania, which could affect company costs, pricing, and potentially the broader insurance market depending on how carriers respond. Because the tax is based on gross premiums, the measure would apply to premium revenue from business written in the state rather than to profits.
No committee transcript or vote history was provided, so there is no recorded debate or formal legislative sentiment to summarize from the available materials. Based on the bill’s text alone, the measure appears to be a revenue-raising proposal, which typically draws support from lawmakers seeking additional state funding and opposition from the insurance industry and other stakeholders concerned about higher operating costs.
The main point of contention is likely the size of the tax increase, which is substantial: a fourfold increase from 2% to 8%. Insurers would be the directly affected parties, and they may argue that the higher tax could be passed through to policyholders in the form of higher premiums or could discourage business activity in Pennsylvania. Supporters would likely frame the bill as a way to increase state revenue from a large industry sector.
Impact
HB1865 would amend section 902(a) of the Tax Reform Code of 1971 to increase the insurance premiums tax rate from 2% to 8% on gross premiums received from business done in Pennsylvania. This would directly affect insurance companies transacting business in the Commonwealth and would likely increase state tax collections beginning with calendar years after December 31, 2025. The bill does not change insurance regulation or coverage requirements, but it would materially alter the tax obligations of insurers under Pennsylvania law.
Sentiment
No committee discussion or voting record was provided, so there is no direct evidence of legislative sentiment in the available materials. From the bill text, the proposal appears to be a revenue measure that may be viewed favorably by supporters of increased state funding, while likely facing resistance from insurers and business advocates because it substantially raises the tax rate on gross premiums. Overall, the available record suggests a potentially contentious fiscal proposal rather than a consensus policy change.
Contention
The central point of contention is the magnitude of the tax increase, from 2% to 8%, which is a significant change in the insurance premiums tax. Opponents are likely to be insurance companies and industry groups concerned about higher costs, possible premium increases, and competitiveness effects. Supporters would likely be lawmakers seeking additional revenue for the Commonwealth. Because no hearing or vote data is available, specific named arguments or factions cannot be identified from the record provided.