The premium tax rate for domestic and foreign insurance companies doing business in Kansas is 2 percent, and the tax rate for domestic and foreign HMOs doing business in Kansas is 3.31 percent. Kansas law K.S.A. 40-252d provides for a tax credit for insurance companies equal to 15 percent of Kansas-based employees’ salaries (not including commissions or fringe benefits), or up to a maximum of 1.125 percent of taxable premiums dependent on the company’s affiliation. The company can claim either the 15 percent credit or up to the 1.125 percent, whichever is less. This could make the effective tax rate on such companies as low as 0.875 percent. This is an annual credit that is recalculated each year. For example, if a company qualified for the 15 percent tax credit, the estimated credit would be calculated as follows: 100 jobs at a $50,000 salary produces an annual payroll of approximately $5,000,000. The 15 percent salary credit would generate a yearly tax credit of $750,000, which can potentially offset up to 1.125 percent of the company’s 2 percent premium tax. Insurance companies may also qualify for the High Performance Incentive Program (HPIP) tax credits to further offset their tax liability.