Texas Insurance Premium Tax: What Title Companies Need to Know

If you’re a title company operating in Texas, understanding the state’s insurance premium tax is critical to your business. But companies may not fully understand how far it reaches or who exactly is responsible. This 1.35% tax, enforced by the Texas Comptroller, applies to gross title insurance premiums on Texas properties and comes with specific rules about who must file, what portions of premiums are taxable, and what happens if companies miss a payment or misfile.

Whether you’re a licensed title insurance company, affiliated agency, captive, or out-of-state insurer writing Texas risk, it’s important to understand your tax obligations and the potential liability if returns aren’t properly handled. This guide breaks down the key requirements and clarifies how the tax applies in 2025.

What is the Texas Insurance Premium Tax?

Under Texas Insurance Code § 223.003, Texas imposes a 1.35% tax on all gross premiums collected for title insurance policies covering Texas property.

This includes (1) premiums retained by title insurers and (2) premiums passed through to title agents. The entire gross premium is taxable, not just the portion retained by the underwriter. There are no deductions for commissions, reinsurance, or internal splits.

Although title insurance premiums are exempt from sales tax under 34 TAC § 3.355, they are still subject to this special-purpose insurance premium tax. The Texas Comptroller takes the tax seriously, and any company or agent involved in the title insurance chain should be aware of the full scope of compliance required.

Who Must Pay the Texas Insurance Premium Tax?

The legal obligation to file and pay the 1.35% premium tax primarily falls on licensed title insurance companies that write policies covering Texas real estate. This responsibility applies regardless of company structure, ownership, or where the company is based.

Licensed Title Insurers

Licensed title insurance companies in Texas must file annual premium tax reports with the Texas Comptroller and pay 1.35% of all gross premiums collected on policies covering Texas real estate. This tax is based on the full premium amount, with no deductions allowed for commissions, administrative costs, or reinsurance arrangements. If a title insurer writes a Texas policy, they must report the full gross premium and pay the corresponding tax.

Out-of-State and Foreign Title Insurers

Title insurers based outside Texas must comply with premium tax rules if they issue title policies on Texas real estate. Regardless of where the company is headquartered or licensed, any insurer collecting premiums for Texas risks must report gross premiums and pay the 1.35% tax.

Licensed Captive Insurers

A captive insurer is a special type of insurance company that is created and owned by a business or group of related businesses to provide insurance coverage primarily for itself and its affiliates. Instead of buying insurance from a traditional third-party insurer, the business forms its own captive company to manage and finance its own risks internally. In Texas, captive insurers are governed by Texas Insurance Code Chapter 964, which establishes licensing and regulatory requirements specific to their structure and purpose.

Captive insurers underwriting title insurance policies covering Texas real estate must comply with state premium tax laws. Under Texas Insurance Code § 223A.003, licensed captive insurers must:

File annual premium tax returns, and
Pay a reduced premium tax rate of 0.5% on all gross premiums collected.

Licensed captive insurers are also subject to a minimum annual premium tax of $7,500 and a maximum of $200,000.

When Agents May Be Held Liable for the Premium Tax

While title insurance companies bear the primary legal responsibility for reporting and paying the tax, title agents can still be on the hook.

If a title company fails to pay the premium tax on the agent’s portion of the gross premiums, the Texas Comptroller can pursue the agent directly to collect what’s owed, plus penalties. This authority is supported by 34 TAC § 3.831 and the Texas Supreme Court’s decision in First Am. Title Ins. Co. v. Combs.

Agents should confirm with their brokers whether the broker is paying the agent’s portion of the annual premium tax because the agent can be personally liable for this tax.

Consider this example:

Total premium collected: $2,000
Portion retained by title insurer: $1,400
Portion retained by agent: $600

The total premium tax owed is $27 (1.35% of $2,000). The title insurance company must file and remit the full $27 to the Comptroller.

If the insurer mistakenly reports only its $1,400 share and remits $18.90, the Comptroller can seek the remaining $8.10 (1.35% of $600) from the agent, along with possible fines or interest.

This liability exists even if the agent was unaware of the underpayment or did not file any returns themselves. For this reason, agents and insurers must ensure there is open communication and precise record-keeping.

When and How Is the Tax Paid?

Per the Texas Comptroller’s guidance, title insurance companies must file an annual premium tax return by March 1 for the previous calendar year. If the total tax liability exceeds $1,000, companies must also make semiannual prepayments due March 1 and August 1.

All filings are submitted to the Texas Comptroller of Public Accounts. The tax return process is streamlined through the Comptroller’s online portal, but companies should keep thorough records of all premiums written, premiums passed to agents, and supporting documentation in case of any audits.

What Happens If You Don’t Pay?

Failure to pay the Texas insurance premium tax by the due date can result in significant penalties and interest. These include a $50 penalty for each late payment, a 5% penalty if the payment is 1 to 30 days late, increasing to 10% if over 30 days late, and interest charges beginning 61 days after the due date.

Nonpayment may also trigger audits and cause business delays, and title agents could face enforcement actions if the insurer underpays. For these reasons, both insurers and agents should maintain accurate records and pay the tax on time.

Stay Ahead of Compliance

If your title insurance company needs assistance reviewing your filings, correcting past returns, or preparing for audits or real estate transactions, our experienced Dallas-based tax law team is here to help.

Note: This law blog is written by the attorneys at Coleman Jackson, P.C., located at 6060 North Central Expressway, Suite 620, Dallas, Texas 75206, for educational purposes only. It does not create an attorney-client relationship between this law firm and the reader. You should consult with legal counsel in your geographic area regarding any legal issues affecting you, your family, or your business.

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