Guide 5 · where and how much

Domiciles, capital and tax: the rules that set the floor

A captive is licensed in a domicile, a state or country with a captive law. The domicile sets the minimum capital, the premium tax and the oversight. These are the published numbers for the domiciles most relevant to US businesses.

Minimum capital in Vermont, by captive type

Captive typeMinimum capital and surplus
Sponsored$100,000
Pure (single-parent)$250,000
Association$500,000
Industrial insured$500,000
Risk retention group$1,000,000

Source: 8 V.S.A. § 60041. These are floors; the regulator may prescribe more based on the type, volume and nature of the business written.

0.38%
Vermont premium tax on the first $20M of direct premium, falling in steps above2
$7,500
Vermont minimum annual premium tax; $200,000 maximum2
≤ 0.38%
Connecticut tax on a Connecticut-domiciled captive3
$120,000
Bermuda Class 1 minimum solvency margin, or more by premium and reserves4

Choosing a domicile

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Home state or a captive centre

Some states, Connecticut among them, let a business form its captive at home. Connecticut says owners of captives domiciled elsewhere may owe its non-admitted premium tax instead3.

Where you domicile can change the tax you pay, not just the capital.

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Capital beyond the floor

The statutory minimum is where the conversation starts. Capital is set case by case in the feasibility study, for the risks actually written1.

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Ongoing oversight

A Vermont captive files annual financial statements and is examined by the regulator’s staff every five years5.

A note on small captives and tax

Federal tax rules for small captives that elect special tax treatment under §831(b) have tightened. In January 2025 the IRS finalised rules that treat some of these “micro-captive” arrangements as listed transactions or transactions of interest that must be reported6. Those rules have since been challenged in several federal courts with differing results: one court set aside the listed-transaction part while upholding the transactions-of-interest part7, and others have upheld the rules8. Any captive should be formed for its risk-management case, with tax advice from your own advisers.

See what a captive would need for your stores

The captive design tool sets out the capital, premium tax, fronting and running costs for a captive on your own data, alongside guaranteed cost, a retro and a large deductible.

Sources

Figures are published rules, estimates and benchmarks, not quotes. They vary by state, domicile, line of cover and year.

  1. Vermont Statutes, 8 V.S.A. § 6004, minimum capital and surplus by captive type. legislature.vermont.gov Statute.
  2. Vermont DFR, Captive fees and premium tax chart: direct premium tax 0.38% on the first $20M, then 0.285%, 0.19%, 0.072%; $7,500 minimum, $200,000 maximum. dfr.vermont.gov Regulator.
  3. Connecticut Insurance Department, FAQs about Public Act 22-118: captive premium tax no greater than 0.38%; owners of captives domiciled elsewhere may owe non-admitted insurance premium tax. portal.ct.gov Regulator.
  4. Bermuda, Insurance Returns and Solvency Regulations 1980: Class 1 minimum solvency margin; summarised in Marsh, Captive Solutions Bermuda fact sheet. marsh.com Regulation, as summarised by a captive manager.
  5. Captive Review, “Q&A: Creating a captive in Vermont”: statutory examination every five years. captivereview.com Trade press.
  6. T.D. 10029, Micro-Captive Listed Transactions and Micro-Captive Transactions of Interest (published 14 January 2025). federalregister.gov Federal regulation.
  7. Captive.com, “Texas Court Partially Strikes IRS Micro-Captive Rule” (17 April 2026), on Drake Plastics. captive.com Secondary.
  8. Journal of Accountancy, “District court upholds final microcaptive reporting regulations” (July 2026); Captive.com, “Federal Court Upholds IRS Micro-Captive Transactions of Interest Rule” (1 July 2026). journalofaccountancy.com Secondary.

This guide is general information about captive insurance. It is not insurance, legal or tax advice. Realtech is an independent consultancy and does not sell insurance.