What is the Alabama PTET rate?

Alabama's PTET rate is 5.00% flat. [PLACEHOLDER: state DOR cite] — confirmed 5% historical rate from prior years, but exact 2026 rate not pinned to revenue.alabama.gov this session.

Is the Alabama owner credit refundable?

Alabama's PTET owner credit is refundable. [PLACEHOLDER: state DOR cite] — credit mechanics not separately pinned this session.

Does Alabama PTET affect composite-return filing?

Forced-out. [PLACEHOLDER: state DOR cite] — confirm AL composite-return preclusion at revenue.alabama.gov FAQ. See the composite-vs-PTET page for the full matrix.

Alabama · AL

Alabama Pass-Through Entity Tax (PTET)

Alabama's PTET regime is one of the 37+ state workarounds to the federal SALT cap (IRC §164(b)(6)). The election is annual, statute-pinned below, and interacts with composite filing and §199A QBI in state-specific ways.

Statute: Code of Alabama 1975 § 40-18-24.2 (Electing Pass-Through Entity Tax); definitions at § 40-18-1 and § 40-18-160
State DOR portal: https://www.revenue.alabama.gov/individual-corporate/electing-pass-through-entities/
Election deadline: Election via Form PTE-E submitted online through My Alabama Taxes at any time during the tax year or on or before the 15th day of the third month following close of the tax year (March 15 for calendar-year filers).
Election form: Form PTE-E (election); Form EPT (annual return); Schedule EPT-C (credits)
Entity-level rate: 5.00% — [PLACEHOLDER: state DOR cite] — confirmed 5% historical rate from prior years, but exact 2026 rate not pinned to revenue.alabama.gov this session.
Eligible entities: s-corp, partnership, llc-as-s, llc-as-partnership
Owner credit: refundable — [PLACEHOLDER: state DOR cite] — credit mechanics not separately pinned this session.
Composite interaction: forced-out — [PLACEHOLDER: state DOR cite] — confirm AL composite-return preclusion at revenue.alabama.gov FAQ.
§199A QBI base reduction: Yes — Reduces federal flow-through income (Notice 2020-75).
Last verified: 2026-05-11

Source: revenue.alabama.gov/individual-corporate/electing-pass-through-entities/. Filing mechanics (PTE-E election + Form EPT + Schedule EPT-C) and election deadline verified; rate/credit specifics flagged as PLACEHOLDER.

IRC §164(b)(6)Notice 2020-75 IRC §199A

Reference computation

For a Alabama pass-through entity with $500,000 of qualified net income allocated to this state, at a 37% federal marginal bracket, the entity-level PTET and federal-deduction math is:

Alabama — reference example

QBI allocation·AL rate= Entity-level tax

$500,000×5%=$25,000

Code of Alabama 1975 § 40-18-24.2 (Electing Pass-Through Entity Tax); definitions at § 40-18-1 and § 40-18-160

Entity tax·Federal bracket= Federal deduction (gross)

$25,000×37%=$9,250

At a 37% federal bracket, the entity-level deduction saves $9,250 in federal tax. Net of §199A QBI offset (~20% × bracket × entity tax = $1,850), aggregate benefit is approximately $7,400.

IRS Notice 2020-75

Run the picker pre-filled for Alabama

Election walkthrough

Verify eligibility. Alabama accepts: s-corp, partnership, llc-as-s, llc-as-partnership. Single-member LLCs (unless treated as S corp) excluded.
Check the deadline. Election via Form PTE-E submitted online through My Alabama Taxes at any time during the tax year or on or before the 15th day of the third month following close of the tax year (March 15 for calendar-year filers). Form EPT (annual return) due March 15 for calendar year. Filed in addition to Form 65 (partnership) or Form 20S (S corp).
Compute the entity-level tax. Apply the 5.00% rate to qualified net income.
Pay and file. Use Form PTE-E (election); Form EPT (annual return); Schedule EPT-C (credits). Quarterly estimates may be required.
Owners claim the state credit. refundable credit on the personal state return.
Verify composite interaction. Composite interaction: forced-out. See composite vs PTET.
Run the federal §199A QBI math. PTET reduces the QBI base proportionally; net the federal SALT-arbitrage against the §199A offset.

Alabama PTET — common questions

Annual deadline reminder

State PTET law revises annually. Alabama's data was last verified on 2026-05-11. Re-confirm with the state DOR primary source before electing or filing. Last full-site review: 2026-05-12.

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Reference computation

For a Alabama pass-through entity with $500,000 of qualified net income allocated to this state, at a 37% federal marginal bracket, the entity-level PTET and federal-deduction math is:

Entity tax·Federal bracket= Federal deduction (gross)

$25,000×37%=$9,250

At a 37% federal bracket, the entity-level deduction saves $9,250 in federal tax. Net of §199A QBI offset (~20% × bracket × entity tax = $1,850), aggregate benefit is approximately $7,400.

IRS Notice 2020-75

Election walkthrough

Verify eligibility. Alabama accepts: s-corp, partnership, llc-as-s, llc-as-partnership. Single-member LLCs (unless treated as S corp) excluded.

Check the deadline. Election via Form PTE-E submitted online through My Alabama Taxes at any time during the tax year or on or before the 15th day of the third month following close of the tax year (March 15 for calendar-year filers). Form EPT (annual return) due March 15 for calendar year. Filed in addition to Form 65 (partnership) or Form 20S (S corp).

Compute the entity-level tax. Apply the 5.00% rate to qualified net income.

Pay and file. Use Form PTE-E (election); Form EPT (annual return); Schedule EPT-C (credits). Quarterly estimates may be required.

Owners claim the state credit. refundable credit on the personal state return.

Verify composite interaction. Composite interaction: forced-out. See composite vs PTET.

Run the federal §199A QBI math. PTET reduces the QBI base proportionally; net the federal SALT-arbitrage against the §199A offset.

Alabama PTET — common questions