Colorado Pass-Through Entity Tax (PTET)
Colorado'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.
- State DOR portal
- https://tax.colorado.gov/SALT-parity-act-election
- Election deadline
- Election made on Form DR 0106 (partnership/S corp return) or in advance on Form DR 1705 (SALT Parity Act Election) or DR 0106EP (estimated payment with election).
- Election form
- Form DR 0106 (return); Form DR 1705 (advance election); Form DR 0106EP (estimated payments)
- Entity-level rate
- 4.40% — [PLACEHOLDER: state DOR cite] — CO flat individual rate is 4.40% for tax year 2024; 2026 rate to be re-pinned against tax.colorado.gov/income-tax-topics-salt-parity-act before publication.
- Eligible entities
- s-corp, partnership, llc-as-s, llc-as-partnership
- Owner credit
- refundable
- Composite interaction
- forced-out — Per tax.colorado.gov SALT Parity guidance: an electing PTE may NOT file a composite return for nonresident partners/shareholders for the year of the election; nonresident agreement (DR 0107) also not required.
- §199A QBI base reduction
- Yes — Reduces federal flow-through income (Notice 2020-75).
- Last verified
- 2026-05-11
Source: tax.colorado.gov/SALT-parity-act-election + DR 0106EP 2026 instructions.
Reference computation
For a Colorado 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:
At a 37% federal bracket, the entity-level deduction saves $8,140 in federal tax. Net of §199A QBI offset (~20% × bracket × entity tax = $1,628), aggregate benefit is approximately $6,512.
Election walkthrough
- Verify eligibility. Colorado accepts: s-corp, partnership, llc-as-s, llc-as-partnership. Disregarded entities excluded.
- Check the deadline. Election made on Form DR 0106 (partnership/S corp return) or in advance on Form DR 1705 (SALT Parity Act Election) or DR 0106EP (estimated payment with election). Originally available for tax years 2022 through 2025; election now extended (verify 2026 status against tax.colorado.gov).
- Compute the entity-level tax. Apply the 4.40% rate to qualified net income.
- Pay and file. Use Form DR 0106 (return); Form DR 1705 (advance election); Form DR 0106EP (estimated payments). 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.
Colorado PTET — common questions
State PTET law revises annually. Colorado'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.