WASHINGTON – Sen. Chuck Grassley of Iowa today led Finance Committee passage of bipartisan legislation supported by Tammy Baldwin of Wisconsin and Joe Donnelly of Indiana to increase the alternative tax liability limitation for small property and casualty insurance companies. These small companies largely serve rural communities, which rely on this adjustment to provide additional surplus and cash flow used to pay customers’ insurance claims.

Currently, property and casualty insurance companies with annual premiums above $350,000 but less than $1.2 million can elect to be taxed on their net investment income as opposed to their annual operating income. The bill would adjust the eligible premium index for inflation – for the first time since 1986 – to $2.2 million, increasing the current maximum limit and indexing it to inflation thereafter.   Grassley worked on the measure in prior Congresses with Sen. Tom Harkin and other senators.  The measure was pending in the last Congress and advanced today as an original Finance Committee bill included in a package of non-controversial tax bills.

“Our legislation updates a key threshold for small insurance companies so they can continue serving their rural customers,” Grassley said. “This legislation helps to ensure that small mutual insurance companies will continue to be able to serve rural residents who have unique circumstances, such as living far from a fire station, and so are often unable to obtain private property insurance through traditional insurance companies.”

“Small mutual insurance companies have a long and important history in the development of rural business and agriculture in Wisconsin,” Baldwin said.  “The bipartisan legislation passed by the Senate Finance Committee today will ensure that the many mutual insurance companies serving small and rural communities in Wisconsin, several for over 100 years, will continue to be able to provide the certainty to their policyholders that is important to economic growth.”

“This bipartisan legislation would help Indiana’s small mutual insurance companies serving Hoosiers in rural communities,” Donnelly said.  “Small mutual insurance companies are important to Indiana’s economy, and this commonsense bill would make a much-needed update to the law.”

Grassley is a senior member and former chairman and ranking member of the Finance Committee, with exclusive Senate jurisdiction over tax policy.

 

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