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Generic business image for news article Image: AdobeStock_By pabrady63

10 October 2025
US
Reporter John Savage

IRS increases § 831(b) premium limit to US$2.9 million

The US Internal Revenue Service (IRS) announces an increase to the premium limit for small insurance companies making a § 831(b) tax election, raising it to US$2.9 million for the 2026 tax year. The updated figure is confirmed in the newly published Revenue Procedure 2025-32, which details annual inflation adjustments for dozens of tax provisions. The § 831(b) election is a key provision for many captive insurance companies, as it allows qualifying small insurers to be taxed only on their net investment income. To be eligible, an insurance company’s net or direct written premiums must not exceed the statutory limit for that taxable year. The new premium threshold is part of a wider package of annual inflation adjustments, some of which stem from amendments made by the One, Big, Beautiful Bill Act (OBBBA). The adjustments for the 2026 tax year will generally apply to tax returns filed in 2027.

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