---
name: us-pte-state-matrix
description: "Tier 2 US federal-level reference skill providing the comprehensive state-by-state matrix of Pass-Through Entity Tax (PTET) elections under the SALT-cap workaround blessed by IRS Notice 2020-75 and codified state-by-state from 2021 onward. Covers election deadlines, rates, eligibility, owner-credit refundability, estimated-tax requirements, and resident-credit interactions for the 35+ states that have enacted PTET regimes. Includes a 5-step decision framework for electing PTET and common-trap callouts for CA, NY, GA, NC, IL, MN, VA. Tax year 2025 under OBBBA."
license: "AGPL-3.0-or-later (code) / OpenAccountants Guide License v1.0 (content)"
metadata:
  source: openaccountants
  openaccountants_url: "https://www.openaccountants.com/skills/us-pte-state-matrix"
  jurisdiction: "US"
  tax_year: "2026"
  last_updated: "2026-10-16"
  authored_by: "Michael Cutajar and the OpenAccountants team"
  trust_label: "Built by Michael Cutajar and the OpenAccountants team"
  review_status: "pending_review"
---

# State pass-through entity elective taxes (PTET): a state-by-state table for tax year 2026, with 2025 return notes

Figures are for tax year 2026 unless a line says 2025. The federal figures come from 26 U.S.C. §164(b) as amended by the One Big Beautiful Bill Act (P.L. 119-21). The state rows come from each state's revenue department or legislature, checked on 25 September 2026. A row marked **check** is one we could not confirm from an official source. Do not rely on it until you have read that state's own guidance.

## Scope and who this is for

- **Covers:** partnerships (including LLCs taxed as partnerships) and S corporations that are deciding whether to elect a state's pass-through entity tax, and the owners who receive the credit, exclusion or deduction. It gives, for each state that has one, how and when to elect, the rate, who may elect, what the owner gets, what nonresident owners must still file, and whether the tax is available for 2026.
- **Federal side:** the SALT deduction cap for individuals and why an entity-level state tax falls outside it ([IRS Notice 2020-75](https://www.irs.gov/pub/irs-drop/n-20-75.pdf); [26 U.S.C. §164](https://www.law.cornell.edu/uscode/text/26/164)).
- **Does not cover:** preparing the entity's PTET return line by line, a C corporation's own state tax, composite returns where no PTET exists, trusts and estates as electing entities, and the US territories.
- **State detail lives elsewhere.** For one state in depth, use that state's own Guide (for example `ca-540-individual-return`, `ga-corporate-and-ptet`, `nj-cbt-and-bait`) and the state's instructions linked in the table. State rules change most years; read the current-year instructions before filing.

## Ask the client first

- Which tax year is being decided: 2026 (elections still open in some states) or 2025 (a few states still accept an election on an extended 2025 return)?
- What is the entity for federal tax: a partnership, an LLC taxed as a partnership, an S corporation, or a disregarded single-member LLC? Most states refuse a disregarded entity.
- Who are the owners? For each owner, get the type (individual, trust, estate, corporation, partnership, tax-exempt body), the state of residence, and the share. Several states refuse the election outright if even one owner is the wrong type.
- In which states does the entity have income, and how much is apportioned to each?
- For each individual owner: filing status, expected modified adjusted gross income (MAGI), and other state and local taxes (property tax, tax on wages). These decide how much the federal cap is really costing them.
- Has anyone already missed a date? Ask about New York (15 March of the tax year) and California (15 June payment) first.
- Can the entity fund estimated payments during the year? Most states want them.
- Does the entity have a net operating loss or large credits? Some states warn against electing then.

## The method, step by step

1. **Check the federal cap first.** For 2026 an individual's deduction for state and local taxes is capped at $40,400 ($20,200 married filing separately). The cap is cut by 30% of MAGI above $505,000 ($252,500 separate), but never below $10,000 ($5,000 separate) ([26 U.S.C. §164(b)(7)](https://www.law.cornell.edu/uscode/text/26/164)). If the owner's state and local taxes already fit under their cap, the election saves little federally.
2. **Confirm the tax falls outside the cap.** A state income tax imposed on and paid by the partnership or S corporation is deducted by the entity in computing non-separately stated income. It is not counted against any owner's SALT cap. This holds whether the tax is elective and whatever credit, exclusion or deduction the owner gets ([Notice 2020-75](https://www.irs.gov/pub/irs-drop/n-20-75.pdf)).
3. **Find the state row in the table below.** Confirm the state has a PTET for the year and that it has not expired. Then check the election method and deadline, and whether the entity and every owner are allowed.
4. **Test each owner.** Work out what each owner gets: a credit, an exclusion or a deduction. Check whether it is refundable, and whether the owner's home state gives a credit for another state's PTET. Owners who get no credit, often corporate or partnership partners, may just bear the cost.
5. **Model cash and dates.** Put the election deadline, any prepayment, the estimated payments and the entity return date on the calendar.
6. **Make the election the way the state requires.** That might be online, on a separate form or on the return. Some states only let an authorised person inside the business make it, not the tax preparer.
7. **Follow through on the owner returns.** Owners often add back the entity's state tax deduction and then claim the credit or exclusion. Nonresident owners may still have to file (see the table).

## Federal figures, with years

| Item | 2025 | 2026 | Source |
| --- | --- | --- | --- |
| SALT cap (single, joint, head of household) | $40,000 | $40,400 | [§164(b)(7)(A)](https://www.law.cornell.edu/uscode/text/26/164) |
| SALT cap, married filing separately (half) | $20,000 | $20,200 | [§164(b)(6)](https://www.law.cornell.edu/uscode/text/26/164) |
| MAGI threshold for the phase-down (half if filing separately: $250,000 / $252,500) | $500,000 | $505,000 | [§164(b)(7)(B)](https://www.law.cornell.edu/uscode/text/26/164) |
| Phase-down rate | 30% of MAGI over the threshold | 30% of MAGI over the threshold | [§164(b)(7)(B)](https://www.law.cornell.edu/uscode/text/26/164) |
| Floor after the phase-down (half if filing separately: $5,000) | $10,000 | $10,000 | [§164(b)(7)(B)(iii)](https://www.law.cornell.edu/uscode/text/26/164) |

- **2027 to 2029:** the cap and the threshold each rise to 101 percent of the prior year's figure. The phase-down applies only to tax years beginning before 1 January 2030 ([§164(b)(7)](https://www.law.cornell.edu/uscode/text/26/164)).
- **From 2030:** the cap reverts to $10,000 for tax years beginning after 2029 ([§164(b)(7)(A)(iv)](https://www.law.cornell.edu/uscode/text/26/164)).
- **Married filing separately:** the cap and the threshold are both halved ([§164(b)(6)–(7)](https://www.law.cornell.edu/uscode/text/26/164)).
- **The PTET route was not restricted by P.L. 119-21.** The Act changed the cap in §164(b) and added paragraph (7). The enacted text contains no limit on entity-level state taxes ([§164, amendments note](https://www.law.cornell.edu/uscode/text/26/164)).
- **Notice 2020-75 is still guidance, not a regulation.** It announced proposed regulations and says taxpayers may rely on it until they are issued ([Notice 2020-75](https://www.irs.gov/pub/irs-drop/n-20-75.pdf)). Check irs.gov for any later guidance before filing.

## The state table (tax year 2026)

How to read it:

- **Owner gets** is one of three things. A *credit* is set against the owner's own state tax. An *exclusion* means the income taxed at the entity drops out of the owner's state return. A *refundable* credit is paid out if it exceeds the owner's tax.
- **Nonresident owners** says whether the election relieves a nonresident owner of filing that state's return. "Not stated" means the state's guidance does not say either way.
- **Rates** are labelled with their year. Several states set the PTET rate equal to the top individual rate, so the rate moves when that rate moves.

| State | 2026 status | Rate | How and when to elect | Who may elect, and exclusions | Owner gets | Nonresident owners | Source |
| --- | --- | --- | --- | --- | --- | --- | --- |
| **Alabama** | In force; no end date found | 5% | Tick the Electing PTE box on the timely filed Form 65 or 20S (including extensions), every year the election applies. Needs consent of the governing body and owners holding more than 50% of voting control. | S corporations and Subchapter K entities. The tax covers all owners' shares; tax-exempt owners' income cannot be excluded. No NOLs. | Refundable credit | Not relieved if they want the credit: they must file to claim it. No composite return needed. | [ALDOR](https://www.revenue.alabama.gov/individual-corporate/electing-pass-through-entities/); [rate FAQ](https://www.revenue.alabama.gov/faq-categories/electing-pass-through-entity-2/) |
| **Arizona** | In force; no end date in the statute | Top individual rate: 2.5% (2023 onward). 2026: **check** | Made by filing the entity's return. First, notify every individual, estate and trust owner of the right to opt out and allow at least sixty days. | Partnerships and S corporations. Excluded: owners that are not individuals, estates or trusts, and owners who opt out. | Credit, nonrefundable; carry forward up to 5 years | Not stated | [A.R.S. 43-1014](https://www.azleg.gov/ars/43/01014.htm); [43-1077](https://www.azleg.gov/ars/43/01077.htm); [2.5% rate](https://www.azleg.gov/legtext/57leg/1R/summary/S.1318FIN_REVISED.DOCX.htm) |
| **Arkansas** | In force | Top individual rate. 2025: 3.9% (capital gains 1.95%). 2026: the top individual rate is 3.7% from 1 Jan 2026; confirm that the tax follows it in DFA's 2026 instructions | Owners holding more than 50% of the voting power elect on Form AR362-E, in ATAP or on the return, before the extended due date. | Partnerships, S corporations and LLCs. Not C corporations, QSubs, trusts or sole proprietors. Owners cannot opt out. | Exclusion | Relieved if all their Arkansas income comes from entities paying the tax | [DFA instructions (2025)](https://www.dfa.arkansas.gov/wp-content/uploads/AR1100PET_Instructions_2025_1.pdf); [Act 2 of 2026](https://www.arkleg.state.ar.us/Home/FTPDocument?path=%2FACTS%2F2026S1%2FPublic%2FACT2.pdf) |
| **California** | In force; extended by SB 132 to tax years beginning before 1 Jan 2031 | 9.3% | Annual, on a timely filed **original** return, never an amended one. Irrevocable. Payment 1 is due 15 June of the election year: $1,000 or 50% of the prior year's PTE tax, whichever is greater. The balance is due by the original due date, without extensions. For 2026 to 2030, a short June payment no longer voids the election. Instead, each owner's credit is cut by 12.5% of their share of the unpaid amount. | Partnerships and S corporations. Not publicly traded partnerships or entities in a combined reporting group. Only consenting individual, fiduciary, estate and trust owners (and SMLLCs they own) are included. | Credit, nonrefundable; carry over up to 5 years; entity adds the deduction back | Not relieved: the credit can only be claimed on the owner's own return, not on a group return. 7% withholding still applies. | [FTB](https://www.ftb.ca.gov/file/business/credits/pass-through-entity-elective-tax/index.html); [FTB help](https://www.ftb.ca.gov/file/business/credits/pass-through-entity-elective-tax/help.html) |
| **Colorado** | In force; DOR has issued a 2026 election form | Individual rate: 4.4% (2025). 2026: **check** | Annual and irrevocable. Tick the box on the DR 0106, or file DR 1705 in advance. | Partnerships and S corporations. A C corporation partner unitary with the partnership is left out. Guaranteed payments are excluded. | Credit, excess refunded. Owners add back the state tax deduction **and** any federal QBI deduction. | Relieved if all their Colorado income is in the entity's return. No composite return allowed. | [DOR SALT Parity Act](https://tax.colorado.gov/income-tax-topics-salt-parity-act); [DR 1705 (2026)](https://tax.colorado.gov/sites/tax/files/documents/DR1705_2026.pdf); [DR 0106K instructions (2025)](https://tax.colorado.gov/sites/tax/files/documents/DR0106K-I_2025.pdf) |
| **Connecticut** | In force; elective from 2024 (it was mandatory from 2018 to 2023) | 6.99% | Annual and irrevocable. Tick the box on a timely filed CT-1065/CT-1120SI, up to the extended due date. The CT-PET return is due 15 March for calendar-year entities. | Partnerships and S corporations. Not publicly traded partnerships. From 2024 no tax is required on C corporation and tax-exempt members. | Credit of **87.5%** of the member's share, refundable | **Check**: the old rule was repealed in 2023 | [DRS](https://portal.ct.gov/drs/taxes/pass-through-entity/tax-information); [Ch. 228z](https://www.cga.ct.gov/current/pub/chap_228z.htm); [CT-PET instructions (2025)](https://portal.ct.gov/-/media/drs/forms/2025/pass-through/ct-pet-instructions_1225.pdf?rev=eebfb4ef8af8449e91daef1e6548c758) |
| **Georgia** | In force; no end date found | Individual rate: 5.19% (2025). 2026: the individual rate is 4.99%, and the tax follows it | Annual. Tick the box on the Form 600S or 700, up to the extended due date. Irrevocable once that date passes. | S corporations and partnerships (all partnerships from 2023). Not SMLLCs. | **Exclusion** (PTEDED). No credit. | Not stated. Do not file a composite return. | [DOR FAQ](https://dor.georgia.gov/hb-149-pass-through-entity-tax-faq); [IT-711 (2025)](https://dor.georgia.gov/document/document/2025-it-711-partnership-income-tax-booklet/download); [4.99% rate](https://dor.georgia.gov/taxes/important-tax-updates) |
| **Hawaii** | In force; no end date | 9% (2024 onward) | Annual. File Form N-362E by the 20th day of the 4th month after year end, or the 20th day of the 10th month if extended. The extension is automatic only if the properly estimated tax is paid. Signed by every member, or by one authorised member. Irrevocable. Must e-file and e-pay or the election is cancelled. | Partnerships (not publicly traded) and S corporations. Not SMLLCs. Only individual, trust and estate members' shares are taxed. | Credit, nonrefundable; carry forward. Add-back from 2025. | Relieved if their only Hawaii income is from electing entities | [DOTAX](https://tax.hawaii.gov/pte/) |
| **Idaho** | **Check**: Idaho's official sites could not be reached when this skill was checked | **Check** | **Check** | **Check** | **Check** | **Check** | Idaho State Tax Commission |
| **Illinois** | In force; the end date was removed (P.A. 104-0453) | 4.95% | Annual, on Form IL-1065 or IL-1120-ST. Irrevocable after the extended due date. | Partnerships (not publicly traded) and S corporations. From tax years ending on or after 31 Dec 2026, a partnership may choose its tax base. Replacement tax is separate and still due. | Credit, reported as a payment | Relieved if their only income is from electing entities and the credit covers the tax | [IDOR](https://tax.illinois.gov/research/publications/pubs/pass-through-information.html); [FY 2026-15](https://tax.illinois.gov/research/publications/bulletins/fy-2026-15.html); [FY 2027-01](https://tax.illinois.gov/research/publications/bulletins/fy-2027-01.html) |
| **Indiana** | In force | Individual rate: 3.00% (2025), 2.95% (2026) | Annual. Made during the year, or on the timely filed IT-65/IT-20S including extensions. Not after the original return is filed, and not by amendment. Binds all owners. | Partnerships, S corporations and LLCs taxed as either. Not SMLLCs or QSubs. | Refundable credit | Not stated. The tax replaces the composite tax, but not county tax. | [DOR FAQ](https://www.in.gov/dor/tax-forms/other-forms/ptet/faq/); [2026 rate](https://www.in.gov/dor/resources/tax-rates-and-reports/rates-fees-and-penalties/) |
| **Iowa** | In force while the federal cap applies. One IDR FAQ page still says it ends in 2025; that page is out of date | Individual rate: 3.8% (2025). 2026: **check** | Annual, on the IA 1065/IA 1120S or GovConnectIowa. Irrevocable. Deadline: six months after the original return due date. | Partnerships (not publicly traded) and S corporations. Not SMLLCs. | Refundable credit, cut by the tax rate: 96.2% of the tax for 2025 | Relieved if their only Iowa income is from electing entities and the credit covers the tax | [IDR guidance](https://revenue.iowa.gov/taxes/tax-guidance/business-income-tax/pass-through-entity-tax-ptet); [Iowa Code 422.16C](https://www.legis.iowa.gov/docs/code/2026/422.16C.pdf); [IDR deadline](https://revenue.iowa.gov/news/2024-12-23/idr-modifies-pass-through-entity-tax-election-deadline); [2025 rates](https://revenue.iowa.gov/media/4367/download?inline=) |
| **Kansas** | In force; no end date in the statute | Top individual rate: 5.58% (2024 onward). A revenue trigger can lower it; 2026: **check** | Annual, on the entity's return; binds all owners | S corporations and partnerships. C corporation partners are excluded. | Credit; the excess is refundable | **Check** | [K.S.A. 79-32,286](https://www.kslegislature.gov/li/b2025_26/statute/079_000_0000_chapter/079_032_0000_article/079_032_0286_section/079_032_0286_k/); [79-32,287](https://www.kslegislature.gov/li/b2025_26/statute/079_000_0000_chapter/079_032_0000_article/079_032_0287_section/079_032_0287_k/); [79-32,110](https://www.kslegislature.gov/li/b2025_26/statute/079_000_0000_chapter/079_032_0000_article/079_032_0110_section/079_032_0110_k/); [79-32,288](https://www.kslegislature.gov/li/b2025_26/statute/079_000_0000_chapter/079_032_0000_article/079_032_0288_section/079_032_0288_k/) |
| **Kentucky** | **Check** (statute not read; DOR forms continue) | Individual rate: 4.0% (2025), 3.5% (2026) | Annual. File Form 740-PTET-ELECT or tick the box on the 740-PTET, by the 15th day of the 4th month after year end (or the extended due date). Irrevocable. The tax is due by the original due date. | Pass-through entities. C corporation owners are excluded. | Refundable credit (PTET-CR) | Not stated; the credit is claimed on Form 740-NP | [DOR instructions](https://revenue.ky.gov/Forms/Form%20PTET%20Instructions.pdf); [740-PTET (2024)](https://revenue.ky.gov/Forms/Form%20740-PTET%202024.pdf); [2026 rate](https://revenue.ky.gov/Forms/INSTR-41APTE%28I%29%20%282025%29.pdf) |
| **Louisiana** | In force; no end date found | 3% flat, for periods beginning on or after 1 Jan 2025 | Form R-6980, which needs LDR acceptance. Due by the 15th day of the 4th month after the first year it applies. **Not annual:** it continues until terminated on R-6983. | S corporations and entities taxed as partnerships | **Exclusion** | Not stated | [LDR FAQ](https://revenue.louisiana.gov/tax-education-and-faqs/faqs/corporation-income-franchise-taxes/does-a-corporation-taxed-as-an-s-corporation-federally-have-to-make-the-pass-through-entity-tax-election/); [3% rate](https://revenue.louisiana.gov/tax-education-and-faqs/faqs/income-tax-reform/what-are-the-income-tax-rates-for-s-corps-and-other-pass-through-entities-making-the-pte-election/) |
| **Maine** | **New for 2026**: tax years beginning on or after 1 Jan 2026 | Top individual rate, currently 7.15% | Annual election. Form and deadline: **check** Maine Revenue Services guidance | Qualified members only; **check** the definition | Refundable credit of **90%** of the member's share | **Check** | [Maine Revenue law changes for 2026](https://www.maine.gov/revenue/sites/maine.gov.revenue/files/inline-files/legischange26.pdf) |
| **Maryland** | In force; no end date in the statute | 8.75% on individual and fiduciary members' shares, 8.25% on entity members' shares (periods beginning after 31 Dec 2024) | Annual and irrevocable. Made with the **first** filing or payment of the year. A first payment sent without the form locks in a *non*-election. Cannot be changed on an amended return. | S corporations, partnerships, and LLCs not taxed as corporations. Tax-exempt members' shares are left out. | Credit, excess refunded. Members add the credit back to federal AGI. | **Not relieved**: file Form 505. No composite return allowed. | [Tax alert](https://www.marylandtaxes.gov/content/dam/mdcomp/tax/legal-publications/alerts/tax-alert-changes-to-standard-and-itemized-deductions-and-to-state-and-local-income-tax-rates-from-the-2025-legislative-session.pdf); [TB IT-6](https://www.marylandtaxes.gov/legal-pubs/tech-bulletins/income-estate-tax/tb-it6.pdf); [nonelection alert](https://www.marylandtaxes.gov/forms/Tax_Publications/Tax_Alerts/Income-Tax-Alert-Process-Change-Instructions-for-Electing-and-Nonelecting-PTEs.pdf) |
| **Massachusetts** | In force while the federal cap is in effect | 5% | Annual. Irrevocable. Binds all members. The excise is due with the original, timely filed return. | S corporations, partnerships and LLCs taxed as either. Only natural persons, and trusts and estates taxed under ch. 62, are counted. | Refundable credit of **90%** of the excise (the 2021 text). **Check** current law and any 2026 change. | **Not relieved**: filing requirements are unchanged | [Ch. 63D as enacted](https://budget.digital.mass.gov/summary/fy22/outside-section/section-39-taxation-of-pass-through-entities) |
| **Michigan** | In force while the federal cap is in effect | Individual rate: 4.25% (2024) | Made by an electronic payment. **Binding for 3 years** (the year of payment and the next two). Deadline: **check** Treasury's current rule. | S corporations and partnerships with Michigan business activity. Not publicly traded partnerships or disregarded entities. C corporation members' shares are excluded. | Credit against the member's income tax (**check** whether refundable) | Not stated | [Senate Fiscal Agency](https://sfa.senate.michigan.gov/Publications/Notes/2023Notes/NotesFal23dzel.pdf); [rate table](https://sfa.senate.michigan.gov/publications/budupdates/statebudgetoverview_mostrecent.pdf) |
| **Minnesota** | Re-enacted by the 2026 tax bill (Laws 2026, ch. 128), with the end date moved to the end of tax year 2027 | 9.85% | Annual, by the due date or extended due date of the PTE return. Made by qualifying owners holding more than 50% of the qualifying owners' interests; binds all qualifying owners; irrevocable for the year. | Partnerships, S corporations and LLCs with at least one qualifying owner; not publicly traded partnerships. Qualifying owners: individuals and estates, trusts only as S corporation shareholders, and disregarded entities owned by them. Other owners are left out. | Refundable credit of 100% of the owner's share | Certain nonresidents can have their filing requirement met by the entity's return | [2026 bill analysis](https://www.revenue.state.mn.us/sites/default/files/2026-05/hf2438sf2082-enacted-otb.pdf); [Minn. Stat. 289A.08](https://www.revisor.mn.gov/statutes/cite/289A.08) |
| **Mississippi** | **Check** (no end date found) | 2025: 0% on the first $5,000, 4% on the next $5,000, 5% above. 2026: **check** | Separate Form 84-381, filed during the year or by the (extended) due date. It cannot be made by filing or amending a return. **Continues until revoked.** | Partnerships and S corporations; not fiduciaries | Credit; excess refunded or carried forward | Relieved if they have no other Mississippi income | [DOR FAQ](https://www.dor.ms.gov/sites/default/files/business/Updated%20EPTE%20FAQ.pdf); [2025 instructions](https://www.dor.ms.gov/sites/default/files/tax-forms/business/2025%20PTE%20INSTRUCTIONS%2084-100%20-%20Final%20%2001.14.2026.pdf) |
| **Missouri** | **Check** (statute text not read) | Top individual rate: 4.7% (2025) | Annual, on a timely filed Form MO-PTE, including extension. Needs a designated representative first. Members may opt out by the original due date. | Partnerships and S corporations | Credit, **nonrefundable**; unlimited carryforward | Relieved if their only Missouri income is from the entity | [DOR FAQ](https://dor.mo.gov/faq/taxation/business/entity-tax.html); [MO-PTE instructions (2025)](https://dor.mo.gov/forms/MO-PTE%20Instructions_2025.pdf); [Missouri SALT Parity rule](https://dor.mo.gov/resources/official-final-rules/documents/12_CSR_10-2_436_SALT_Parity_Act_Implementation-_Law_9-30-2025.pdf); [credit FAQ](https://dor.mo.gov/faq/taxation/business/salt-parity-act.html) |
| **Montana** | In force; no end date found | Top individual rate. DOR says 5.9%; the 2026 top rate in Montana Code 15-30-2103 is 5.65%. **Check** DOR's 2026 figure. | Annual, on the timely filed Form PTE including extensions. Irrevocable. | Partnerships and S corporations. C corporation and tax-exempt owners' shares are excluded. | Refundable credit | Relieved if all their Montana income is taxed at the entity | [DOR](https://revenue.mt.gov/taxes/pass-through-entities/pass-through-entity-tax); [Montana Code 15-30-3327](https://leg.mt.gov/bills/mca/title_0150/chapter_0300/part_0330/section_0270/0150-0300-0330-0270.html); [Montana Code 15-30-2103](https://leg.mt.gov/bills/mca/title_0150/chapter_0300/part_0210/section_0030/0150-0300-0210-0030.html) |
| **Nebraska** | In force; DOR says it is not tied to the federal cap | 5.20% (2025), 4.55% (2026), 3.99% (2027 onward) | Annual. File Form PTET-E or tick Box 5 on the return, by the extended due date. Irrevocable. | Partnerships (not publicly traded) and S corporations. Not disregarded LLCs. | Refundable credit | Not stated | [DOR FAQ](https://revenue.nebraska.gov/about/frequently-asked-questions/pass-through-entity-tax-faqs); [DOR](https://revenue.nebraska.gov/tax-credits/nebraska-pass-through-entity-tax-ptet) |
| **New Jersey (BAIT)** | In force | 2026: 5.675% up to $250,000; 6.52% up to $1,000,000; 10.9% above | Separate online election each year, by the **original** due date of the PTE-100. Extensions do not extend it. It must be made before any payment is accepted. | Partnerships, S corporations and LLCs with at least one member liable for NJ gross income tax. Not SMLLCs or sole proprietors. | Refundable credit | **Not relieved** if they meet the filing threshold | [Division of Taxation](https://www.nj.gov/treasury/taxation/baitpte/index.shtml); [FAQ](https://www.nj.gov/treasury/taxation/baitpte/baitpte-faq.shtml); [PTE-100 instructions](https://www.nj.gov/treasury/taxation/pdf/current/pte-bait/pte100instr.pdf) |
| **New Mexico** | In force (no end date found) | Higher of the top personal and corporate rates, currently 5.9% | Annual, by filing the entity return and completing the entity-level tax section. Binds all owners. | Pass-through entities. The tax cannot be paid for government, tribal or 501(c)(3) owners, for unitary corporate partners, or for PTE owners. | Credit | Withholding is not needed for owners the entity paid for | [TRD](https://www.tax.newmexico.gov/businesses/corporate-income-franchise-tax-overview/pass-through-entity/) |
| **New York (State)** | In force | 6.85% up to $2 million, rising to 10.90% above $25 million | Online, between 1 Jan and **15 March of the tax year itself**, by an authorised person (not the preparer). Irrevocable after the first estimate date. | Partnerships (not publicly traded) and NY S corporations. Not SMLLCs unless treated as S corporations. Corporate and partnership partners get no credit. | Refundable credit | **Not relieved**: they cannot claim it on a group return and must file IT-203 | [PTET](https://www.tax.ny.gov/bus/ptet/); [rates](https://www.tax.ny.gov/e-services/ptet/calculations.htm); [FAQ](https://www.tax.ny.gov/bus/ptet/faq.htm) |
| **New York City** | In force | 3.876% | Same window (by 15 March). Only for entities that also elected the State PTET. | City partnerships with at least one city taxpayer partner; city resident S corporations whose shareholders are all city taxpayers | Credit against city tax | Not stated | [NYC PTET](https://www.tax.ny.gov/bus/ptet/city.htm); [calculation](https://www.tax.ny.gov/e-services/ptet/calculations-city.htm) |
| **North Carolina** | In force; a 2026 estimate voucher has been issued | Individual rate: 4.25% (2025), 3.99% (2026) | On the timely filed return, by the due date including extensions. An election on a late return is invalid. | S corporations and partnerships. Not publicly traded partnerships, or partnerships with any partner other than an individual, estate, §1361(c)(2) trust or §1361(c)(6) organisation. | **Exclusion** (the owner deducts their share) | Relieved if their only NC income is from the entity and it complies | [NCDOR notice](https://www.ncdor.gov/taxes-forms/information-tax-professionals/tax-bulletins-directives-and-other-important-notices/important-notices-and-frequently-asked-questions-personal-taxes/important-notice-regarding-north-carolinas-recently-enacted-pass-through-entity-tax); [rates](https://www.ncdor.gov/taxes-forms/individual-income-tax/tax-rate-schedules); [2026 voucher](https://www.ncdor.gov/taxes-forms/partnership-tax/partnership-tax-forms-and-instructions/2026-nc-40-pte-taxed-partnership-estimated-income-tax) |
| **Ohio** | In force; 2026 estimate dates are published | 3% (2023 onward, per the 2025 instructions) | For one year at a time. File the IT 4738, or the EPTE-ELEC, by the deadline including extensions. Irrevocable once the IT 4738 is filed. | Qualifying PTEs. Not disregarded entities, 501(c) bodies, publicly traded partnerships, trusts or estates. | Refundable credit | Relieved if they have no other Ohio income | [ODT](https://tax.ohio.gov/business/pass-through-entity-and-fiduciary-income-tax/it-4738); [2025 instructions](https://dam.assets.ohio.gov/image/upload/v1769121383/tax.ohio.gov/forms/pass-through_entities/2025/it4738-instructions.pdf) |
| **Oklahoma** | In force; 2026 rate **check** | 4.75% on individual, trust and estate members; 4% on corporate and partnership members | Form 586, filed during the prior year or within 2 months and 15 days of the year's start; or on the return (from 2024) by the extended due date. **Binding until revoked.** | Entities that file an Oklahoma partnership or S corporation return | **Exclusion** | Not stated | [Form 586](https://oklahoma.gov/content/dam/ok/en/tax/documents/forms/businesses/corporate-income-tax/current/586.pdf); [Form 587-PTE](https://oklahoma.gov/content/dam/ok/en/tax/documents/forms/businesses/corporate-income-tax/current/587-PTE.pdf) |
| **Oregon** | Extended by SB 1510 (2026) to tax years beginning before 1 Jan 2028 | 9% on the first $250,000 of distributive proceeds, 9.9% above | Annual, by filing Form OR-21 by the due date **including extensions**. Late returns are not accepted. Revocable until then. | Partnerships and S corporations whose owners are all individuals, or PTEs owned entirely by individuals | Refundable credit, with add-back | A composite return is still needed for nonresidents in it | [ODR](https://www.oregon.gov/dor/programs/businesses/pages/pass-through-entity-elective-tax.aspx) |
| **Rhode Island** | **Check**: official site blocked our fetch | **Check** | **Check** | **Check** | **Check** | **Check** | RI Division of Taxation |
| **South Carolina** | In force; no end date | 3% on active trade or business income | Annual. Tick the box on the SC1065/SC1120S, up to the extended due date. Owners cannot opt out. | Only if **every** owner is a qualified owner, and any partnership owner is itself owned by qualified owners. Owners taxed or exempted under §§12-6-530 to 12-6-540 and 12-6-550 (for example a C corporation), and any other SC-exempt owner, disqualify the entity. Covers active trade or business income only. | **Exclusion**. No credit, and generally no other-state credit. | Not stated. Withholding relief applies up to the tax paid. | [S.C. Code 12-6-545](https://www.scstatehouse.gov/code/t12c006.php); [RR 21-15](https://dor.sc.gov/resources-site/lawandpolicy/Advisory%20Opinions/RR%2021-15.pdf) |
| **Utah** | **Check**: we could not confirm the election exists for 2026 | Individual rate: 4.5% (from 1 Jan 2025) | **Check** the Utah State Tax Commission's current SALT election guidance | **Check** | Credit, nonrefundable; carry forward 10 years; add-back required | Not stated | [Owner credit](https://incometax.utah.gov/credits/pass-through-entity-credit); [rates](https://incometax.utah.gov/paying/tax-rates) |
| **Virginia** | Made permanent in 2026 (previously ending 1 Jan 2027) | 5.75% | Annual, on a timely filed Form 502PTET including extensions. An estimated or extension payment also counts as electing. | Separate entities for federal tax. Only eligible owners' shares are taxed: individuals, estates and trusts subject to Virginia tax. Not disregarded SMLLCs. | Refundable credit; add back the deduction | Not stated. No Form 765 composite return allowed. | [§58.1-390.3](https://law.lis.virginia.gov/vacode/title58.1/chapter3/section58.1-390.3/); [2026 summary](https://www.tax.virginia.gov/sites/default/files/inline-files/2026-legislative-summary.pdf); [502PTET instructions](https://www.tax.virginia.gov/sites/default/files/taxforms/corporation-and-pass-through-entity-tax/2025/502ptet-instruction-package-2025.pdf) |
| **West Virginia** | In force; no end date | Top individual rate: 4.82% (2025). 2026: **check** | Annual and irrevocable, by filing the EPT-100. The Tax Division says by 15 March for calendar-year filers; the statute allows the extended due date. Use 15 March. | Partnerships and S corporations; not disregarded entities; tiered partnerships may elect | Credit, nonrefundable; 5-year carryforward; individuals only | Relieved if all their WV income is through an electing entity that paid in full | [Tax Division](https://tax.wv.gov/Business/ElectivePassThroughEntityTax/Pages/ElectivePassThroughEntityTax.aspx); [EPT-100 instructions (2025)](https://tax.wv.gov/Documents/PTE/2025/ept100.Instructions.2025.pdf) |
| **Wisconsin** | In force; no end date found | 7.9% | Annual. Box I on Form 3, or box 7 on Form 5S, by the extended due date. Needs consent from owners with more than 50%. Revocable by amended return by the same date. | Partnerships and S corporations; no residence or owner-type limit | **Exclusion**. Losses do not pass through. | Not stated; no pass-through withholding | [DOR FAQ](https://www.revenue.wi.gov/Pages/FAQS/ise-passthrough-general.aspx); [Schedule 3-ET](https://www.revenue.wi.gov/TaxForms2025/2025-Schedule3-ET-Inst.pdf); [Schedule 5S-ET](https://www.revenue.wi.gov/TaxForms2025/2025-Schedule5S-ET-Inst.pdf) |

**No PTET found.** Delaware ([HB 489](https://legis.delaware.gov/BillDetail/129844) died in 2022) and Vermont ([S.45](https://legislature.vermont.gov/bill/status/2024/S.45) stalled in 2023) had not enacted one when we checked. We found no enacted PTET for North Dakota, Pennsylvania or the District of Columbia either, but no official page confirms that. **Check** each of these before advising.

## Boundaries and exceptions

| Situation | Rule | Source |
| --- | --- | --- |
| Owner's own state and local taxes are already under the federal cap | The election still moves the state tax to the entity, but the federal saving is small. Model it before electing. | [§164(b)](https://www.law.cornell.edu/uscode/text/26/164) |
| Owner's MAGI is above the threshold | The cap shrinks by 30% of the excess, down to $10,000. At that point the entity-level deduction is worth the most. | [§164(b)(7)(B)](https://www.law.cornell.edu/uscode/text/26/164) |
| Corporate, partnership or tax-exempt owners | Many states leave their shares out of the base or give them no credit (NY, MN, VA, HI, MT). In North Carolina and South Carolina, one such owner can block the election for everyone. | State rows above |
| Disregarded single-member LLC | It cannot elect in most states (NY unless it is an S corporation, OH, IN, IA, NE, WV, VA). | State rows above |
| Election method is not "on the return" | NY, NJ and MS need a separate election. Maryland treats the first payment or filing of the year as the election. Michigan's is made by payment. | State rows above |
| Election carries over to later years | Louisiana, Oklahoma and Mississippi elections run until revoked. Michigan's binds for 3 years. Everywhere else it is year by year. | State rows above |
| Owner's home state and a second state's PTET | Whether the home state gives a credit for another state's PTET depends on the home state. For example, Connecticut and Maine give residents a credit for a substantially similar tax paid to another state. When a South Carolina entity makes the SC election, its owners are generally not entitled to South Carolina's credit for tax paid to other states. Check the home state's credit form. | [Ch. 228z](https://www.cga.ct.gov/current/pub/chap_228z.htm); [Maine Revenue law changes for 2026](https://www.maine.gov/revenue/sites/maine.gov.revenue/files/inline-files/legischange26.pdf); [SC policy manual ch. 3](https://dor.sc.gov/sites/dor/files/Documents/Policy%20Manuals/SCTIED-2025-Chapter%203.pdf) |
| Credit worth less than the tax paid | Connecticut gives 87.5%, Massachusetts 90% (2021 text) and Maine 90%. Iowa's credit is cut by the tax rate. The owner bears the difference. | State rows above |
| Nonrefundable credit | Arizona, California, Hawaii, Missouri, Utah and West Virginia credits are not refunded. Excess credit only carries forward. | State rows above |

## Worked cases

**Case 1: 2026 federal cap with the phase-down.** A married couple filing jointly has 2026 MAGI of $555,000. The excess over $505,000 is $50,000. The reduction is 30% × $50,000 = $15,000, so their 2026 cap is $40,400 − $15,000 = $25,400. That is still above the $10,000 floor ([§164(b)(7)](https://www.law.cornell.edu/uscode/text/26/164)).

**Case 2: the floor.** The same couple with 2026 MAGI of $650,000. The excess is $145,000, and 30% of that is $43,500. That is more than the $30,400 that sits above the floor ($40,400 − $10,000), so the cap is $10,000 ([§164(b)(7)(B)(iii)](https://www.law.cornell.edu/uscode/text/26/164)). State tax moved into the entity is then worth the most federally, because the entity deducts it and it is outside the cap ([Notice 2020-75](https://www.irs.gov/pub/irs-drop/n-20-75.pdf)).

**Case 3: Oregon 2026.** An electing S corporation has $400,000 of distributive proceeds. The tax is 9% × $250,000 = $22,500, plus 9.9% × $150,000 = $14,850, a total of $37,350. The election needs an OR-21 filed by the due date including extensions. For 2026 only, the first two estimates are both due 15 June ([ODR](https://www.oregon.gov/dor/programs/businesses/pages/pass-through-entity-elective-tax.aspx)).

**Case 4: New York State 2026.** A partnership with $3,000,000 of PTE taxable income owes $137,000 plus 9.65% × $1,000,000 = $96,500, a total of $233,500 ([rates](https://www.tax.ny.gov/e-services/ptet/calculations.htm)). This only works if the election was made online by 15 March 2026. After that date, 2026 is closed ([PTET](https://www.tax.ny.gov/bus/ptet/)).

**Case 5: California 2026 short June payment.** The prior year's PTE tax was $60,000, so the 15 June 2026 payment must be the greater of $1,000 or 50% × $60,000 = $30,000. The entity pays only $20,000, leaving $10,000 unpaid. An owner with a 50% share has a $5,000 share of the unpaid amount. That owner's credit is reduced by 12.5% × $5,000 = $625. The election itself survives for 2026 ([FTB](https://www.ftb.ca.gov/file/business/credits/pass-through-entity-elective-tax/index.html)).

**Case 6: North Carolina 2026 exclusion.** A taxed partnership with $500,000 of NC income owes 3.99% × $500,000 = $19,950. Each owner deducts their share of that income on their NC return; there is no credit. The partnership cannot elect at all if any partner is, for example, a corporation ([NCDOR notice](https://www.ncdor.gov/taxes-forms/information-tax-professionals/tax-bulletins-directives-and-other-important-notices/important-notices-and-frequently-asked-questions-personal-taxes/important-notice-regarding-north-carolinas-recently-enacted-pass-through-entity-tax); [rates](https://www.ncdor.gov/taxes-forms/individual-income-tax/tax-rate-schedules)).

## When to refuse or refer

- The state row says **check** (Idaho, Rhode Island, Utah for 2026, the Maine election mechanics, and the unverified items in other rows). Do not advise from this skill; read the state's current instructions first.
- A deadline has passed and the client wants to elect late. The state pages checked for this skill describe no general late-election relief (Oregon and North Carolina say outright that a late return cannot carry the election). Refer to a state tax specialist rather than filing.
- Tiered entities (a PTE owning a PTE), trusts or estates as owners, or entities with corporate owners in states that restrict them.
- Owners who are residents of a state whose credit for other-state PTETs is unclear, where the double-tax risk is material.
- Entities with net operating losses in states that disallow them against the tax (for example Alabama, Iowa, and New Mexico, which advises such entities not to elect for now).
- Any question on how the entity-level deduction interacts with the owner's federal QBI deduction, or with basis and at-risk limits. Refer to the federal preparer.

## Filing and payment

- **Estimated payments are required** in most states once the election is expected. Examples from the sources:
  - New York State and City: 15 March, 15 June, 15 September and 15 December of the tax year.
  - Oregon: 15 April, 15 June, 15 September and 15 January; in 2026 only, the first two are both due 15 June.
  - Indiana (2026 onward): 20 April, 20 June, 20 September and 20 December.
  - Hawaii: the 20th of April, June, September and January.
  - Ohio (2026 onward): 15 April, 15 June, 15 September and 15 January.
  - Missouri requires no estimates. See each state's page in the table.
- **Returns:** the entity files the state's PTET return or schedule; Hawaii cancels an election that is not filed and paid electronically, and Oregon accepts only electronic returns ([DOTAX](https://tax.hawaii.gov/pte/); [ODR](https://www.oregon.gov/dor/programs/businesses/pages/pass-through-entity-elective-tax.aspx)).
- **Owners:** give each owner their share of tax paid on the state's owner statement (for example NY IT-653 support, CA 3804-CR support, NM RPD-41359). Issue Oregon's OR-21-K-1 only after the entity return is filed, or the credit can be disallowed ([ODR](https://www.oregon.gov/dor/programs/businesses/pages/pass-through-entity-elective-tax.aspx)).
- **Federal reporting:** the entity deducts the state tax in computing its non-separately stated income; it is not a separately stated SALT item for owners ([Notice 2020-75](https://www.irs.gov/pub/irs-drop/n-20-75.pdf)).

## 2025 returns (dated section)

- **2025 federal cap:** $40,000 ($20,000 married filing separately), reduced by 30% of MAGI over $500,000 ($250,000 separate), but not below $10,000 ($5,000 separate) ([§164(b)(7)](https://www.law.cornell.edu/uscode/text/26/164)). Extended 2025 individual returns are due 15 October 2026.
- **Late 2025 elections that may still be open on 25 September 2026:** only where the state ties the election to an extended due date that has not yet passed. For example:
  - Oregon's OR-21 is due 15 October with an extension ([ODR](https://www.oregon.gov/dor/programs/businesses/pages/pass-through-entity-elective-tax.aspx)).
  - Hawaii's N-362E is due by the 20th day of the 10th month if extended ([DOTAX](https://tax.hawaii.gov/pte/)).
  - Iowa's deadline is six months after the original return due date ([IDR](https://revenue.iowa.gov/news/2024-12-23/idr-modifies-pass-through-entity-tax-election-deadline)).
  - New York, New Jersey and California 2025 elections closed long ago; do not attempt them.
- **2025 rates differ** in several rows (for example Indiana 3.00%, Georgia 5.19%, Kentucky 4.0%, Nebraska 5.20%, North Carolina 4.25%). Use the 2025 figure for a 2025 return.
- **Minnesota** re-enacted its tax for 2026 after it had lapsed at the end of 2025 ([2026 bill analysis](https://www.revenue.state.mn.us/sites/default/files/2026-05/hf2438sf2082-enacted-otb.pdf)). A 2025 Minnesota election had to be made by the due date or extended due date of the 2025 PTE return ([Minn. Stat. 289A.08](https://www.revisor.mn.gov/statutes/cite/289A.08)).

## Completion checklist

- [ ] Tax year confirmed (2026, or a still-open 2025 election).
- [ ] Owner-level federal cap computed for each individual owner, with the 2026 threshold and floor.
- [ ] State row read; any **check** item resolved from the state's own current guidance.
- [ ] Entity type and every owner's type tested against the state's eligibility rules.
- [ ] Election method and deadline diarised (NY 15 March; CA 15 June payment; MD first payment with the form; NJ original due date).
- [ ] Rate for the correct year applied; credit haircut or nonrefundable status noted for each owner.
- [ ] Home-state credit for other-state PTET confirmed for each resident owner.
- [ ] Nonresident owners told whether they must still file.
- [ ] Estimated payments scheduled and funded.
- [ ] Owner statements issued after the entity return (Oregon) and add-backs flagged on owner returns.

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> **General reference only.** This document does not constitute tax, legal, or
> financial advice. Verify figures against the cited primary sources or with a
> licensed professional before relying on them.

## Today's figures and who stands behind this skill

This file is an AI skill (tax rules your AI follows) from OpenAccountants, copied on 2026-10-16. Rates, thresholds and deadlines change. For the current version of this skill, its official sources and the named accountant (if any) who stands behind it, call `get_skill` with slug `us-pte-state-matrix` on the OpenAccountants connector (https://www.openaccountants.com/connect), or read https://www.openaccountants.com/skills/us-pte-state-matrix. If neither is available, confirm every figure against the official source pages cited above before relying on it.