California Issues Bulletin #1516 on 2025 Surplus Line Tax Filing Requirements

On January 15, 2026, the California Department of Insurance released Bulletin #1516 detailing surplus line tax filing requirements for the 2025 tax year. All surplus line brokers must submit their annual state tax return through CDI’s Premium Tax Processing System (Online Tax Forms – Sign In) by March 2, 2026. The bulletin provides guidance on tax rates, zero-premium filing obligations, monthly prepayment thresholds, acceptable payment methods, and penalties for late or missed filings. Brokers should review the requirements carefully to ensure timely and accurate submission.

Annual Surplus Line Tax Filing Deadline and Submission Method

Under Bulletin #1516, surplus line brokers must file their 2025 annual state tax return on or before March 2, 2026. All filings for the 2025 tax year must be submitted electronically through the California Department of Insurance Premium Tax Processing System (PTPS).

For 2023 and prior tax years, including amended returns for active years, CDI will only accept filings via email. Brokers should ensure they are using the correct submission method based on the applicable tax year to avoid processing delays or rejected filings.

Access to PTPS, along with tax forms, instructions, filing calendars, and frequently asked questions, is available through CDI’s Premium Tax Processing System webpage. (Tax Forms, Instructions & Information)

Tax Rate Calculation and Reporting Requirements

The surplus line tax rate remains 3% of gross policy premiums plus fees, minus any returned premiums, as outlined in California Insurance Code §1774. Additional guidance on fees can be found in CDI Bulletin 80-6, which addresses brokers’ fees and similar charges.

The invoice date determines when state tax is due, not the policy effective date. All amounts reported and paid to CDI must be submitted in whole dollars, a requirement that applies only to CDI tax forms and payments. This does not affect stamping fees paid to the Surplus Line Association.

Zero Premium Tax Returns and Broker Reporting Rules

Bulletin #1516 reiterates that annual tax returns are required even if no surplus line business was transacted during the 2025 calendar year. Brokers with no taxable premiums must still file a Zero Premium Tax Return.

However, endorsed brokers who transact business solely on behalf of a surplus line broker entity are not required to file a separate zero return. These endorsed brokers should instead be reported on the entity’s annual tax return. Understanding how broker activity is reported is essential to avoid duplicate or unnecessary filings.

Monthly Tax Payments, EFT Requirements, and Penalties

Surplus line brokers with an annual tax liability of $20,000 or more in the preceding year are required to make monthly prepayments for the current year. These payments must be remitted via Electronic Funds Transfer (EFT) (EFT).

Brokers with an annual tax liability below $20,000 may continue to submit payments by check. If a broker is required to make monthly payments but no tax is due for a specific month, a zero-payment voucher must still be filed to report that activity.

Failure to remit taxes on time will result in a 10% penalty on the amount due, plus interest of 1% per calendar month, as specified under CIC §1775.5(c)(1).

Conclusion / Summary

California Bulletin #1516 reinforces the importance of timely and accurate surplus line tax filings for the 2025 tax year. With a firm deadline of March 2, 2026, required electronic filing through PTPS, clear rules around zero-premium returns, and strict penalties for late payments, surplus line brokers should review their tax processes now. Early preparation and a clear understanding of filing obligations can help avoid unnecessary penalties and last-minute complications.

For additional information please see: 2025 Insurance (Premium) Tax Form Filing Information

For any questions relating to this bulletin, please direct them to the Legal Compliance department at (415) 434-4900 or compliance@slacal.com