New York State Pass-Through Entity Tax (PTET) Election: Key Considerations for 2025

As tax season approaches, eligible partnerships and S corporations should prepare for the New York State Pass-Through Entity Tax (PTET) election. The deadline to opt-in for the 2025 tax year is March 15, 2025. Here’s what you need to know to make an informed decision.

What is PTET?

The PTET is an optional tax that allows eligible entities to pay tax at the entity level instead of passing it through to individual owners. By electing to pay taxes at the entity level, owners may benefit from a lower overall tax rate. This can provide significant tax benefits, including a potential reduction in personal income tax liability. The PTET also simplifies tax reporting for pass-through entities by consolidating tax obligations at the entity level.

Key Points to Remember

• Eligibility: Only eligible partnerships and S corporations can opt into the PTET. Ensure that your entity qualifies before the deadline.
• Election Process: The election must be made online through your entity’s Business Online Services account on the New York State Department of Taxation and Finance website. An authorized person, not a tax professional, must complete this process.
• Timeline is Crucial: The March 15 deadline is strict. Late elections will not be accepted, so it’s vital to act promptly.
• Estimated Payments: For those opting into PTET, remember that estimated payments will be required throughout the year, typically due on March 15, June 15, September 15, and December 15.

Benefits of Opting into PTET

• Tax Savings: By electing to pay taxes at the entity level, owners may benefit from a lower overall tax rate.
• Simplified Tax Reporting: The PTET simplifies tax reporting for pass-through entities by consolidating tax obligations at the entity level.

Don’t miss out on the opportunity to optimize your tax strategy by participating in the NYS PTET. Ensure your documents are ready and submit your election by March 15, 2025.