Relating to the applicability of premium and maintenance taxes to the Texas Windstorm Insurance Association and Texas FAIR Plan Association.

Contracts

• Servicing Carrier Agreements: If your organization acts as a servicing carrier or fronting entity for TWIA/TFPA, review compensation clauses immediately. If administrative fees are calculated as a percentage of "gross written premium including taxes," the removal of the tax component will lower your fee basis. You may need to renegotiate to maintain revenue neutrality.
• Tax Software Vendors: Ensure third-party tax compliance vendors (e.g., Sovos, Vertex) update their Texas rate tables to apply a 0.00% rate specifically for TWIA/TFPA policies effective June 20, 2025.

Hiring/Training

• Tax Teams: Brief tax accounting staff that the 1.6% premium tax and the maintenance tax no longer apply to TWIA/TFPA.
• Underwriting: Underwriters should be aware that TWIA/TFPA now possess a roughly 1.6%+ operating cost advantage, potentially impacting competitive positioning in coastal zones.

Reporting & Record-Keeping

• Amended Returns (TWIA/TFPA): The law applies retroactively to liabilities accruing on or after January 1, 2023. TWIA and TFPA must prepare amended filings for Tax Years 2023 and 2024 to reclaim overpayments.
• Data Segregation: Private carriers must ensure policy administration systems clearly distinguish between their own book (taxable) and TWIA/TFPA policies (exempt) to prevent commingling of tax liabilities.

Fees & Costs

• Maintenance Tax Increase (Private Market): The Legislative Budget Board Fiscal Note confirms that maintenance tax rates are set to fund agency operations. With TWIA and TFPA removed from the payer pool, the denominator shrinks. Private insurers must increase accruals for the Fire and Allied Lines Maintenance Tax for the upcoming cycle to absorb this cost shift.