New York Pass-Through Entity Tax (PTET)
New York'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://www.tax.ny.gov/bus/ptet/
- Election deadline
- Annual election made on or after January 1 and no later than March 15 of the tax year for which the election is made (postponed to next business day if March 15 is a weekend/holiday). Quarterly estimated payments due March 15, June 15, September 15, and December 15.
- Election form
- PTET Annual Election and Annual Return (filed via NY Business Online Services); Form IT-653 (owner credit)
- Entity-level rate
- 6.85% to 10.90% (4 graduated brackets)
- Eligible entities
- s-corp, partnership, llc-as-s, llc-as-partnership
- Owner credit
- refundable — Per tax.ny.gov/bus/ptet/: if the PTET credit allowable for any taxable year exceeds the tax due, the excess is treated as an overpayment (i.e., refundable in operation).
- Composite interaction
- stacks — [PLACEHOLDER: state DOR cite] — composite/group return interaction not pinned this session.
- §199A QBI base reduction
- Yes — Federal §199A QBI base is reduced because PTET reduces flow-through ordinary income (Notice 2020-75).
- Last verified
- 2026-05-11
Source: tax.ny.gov/bus/ptet/. NY S-corp eligibility uses Tax Law § 660 (NYS S-corp election). Tax-rate bracket precise text should be re-verified against tax.ny.gov/bus/ptet/faq.htm before publication.
Reference computation
For a New York 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 $12,673 in federal tax. Net of §199A QBI offset (~20% × bracket × entity tax = $2,535), aggregate benefit is approximately $10,138.
Election walkthrough
- Verify eligibility. New York accepts: s-corp, partnership, llc-as-s, llc-as-partnership. Single-member LLCs (unless they elect S-corp treatment) and sole proprietorships are excluded.
- Check the deadline. Annual election made on or after January 1 and no later than March 15 of the tax year for which the election is made (postponed to next business day if March 15 is a weekend/holiday). Quarterly estimated payments due March 15, June 15, September 15, and December 15. Annual return due March 15 of the year following the tax year. Election is annual and irrevocable for that year.
- Compute the entity-level tax. New York uses graduated brackets — see the picker for your specific allocation.
- Pay and file. Use PTET Annual Election and Annual Return (filed via NY Business Online Services); Form IT-653 (owner credit). Quarterly estimates may be required.
- Owners claim the state credit. refundable credit on the personal state return.
- Verify composite interaction. Composite interaction: stacks. 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.
Why PTET matters in this state
New York's pass-through owner class faces a state-level rate ladder that climbs into double digits at high allocations, plus a residency-based New York City surcharge for Manhattan-domiciled owners. The SALT cap under IRC §164(b)(6) made New York PTET one of the most economically attractive elections in the country starting in 2021. Tax Law Article 24-A (§§860–866) lets eligible S-corps and partnerships pay a graduated PTET at the entity level and pass through a refundable owner credit. The typical beneficiary is a New York-resident partner or S-corp shareholder with multi-hundred-thousand-dollar K-1 income whose personal SALT deduction would otherwise be capped. For New York City residents, the additional NYC PTET (a separate election under Article 24-B) layers on top — see the NYC page for that mechanic.
Election mechanics
The election window opens January 1 and closes March 15 of the tax year — an annual election made through the New York Business Online Services portal. If March 15 falls on a weekend or holiday, the deadline rolls to the next business day. The election is annual and irrevocable for the year once made. Quarterly estimated payments are required on March 15, June 15, September 15, and December 15. The annual PTET return is due March 15 of the year following the tax year. Eligible entities are S-corps, partnerships, LLCs taxed as either; single-member LLCs (unless they have elected S-corp treatment) and sole proprietorships are excluded. New York's S-corp eligibility flows through Tax Law §660.
Owner credit walkthrough
The owner credit is refundable in operation: if the credit allowable in a given year exceeds the owner's New York tax due, the excess is treated as an overpayment and refunded. Owners claim it on Form IT-653. Multi-owner allocation is pro rata by distributive share. Because the credit is refundable, owners with a temporary liability shortfall (e.g., a loss year on other income) still capture the full benefit — a meaningful advantage over states where the credit is non-refundable or capped. Resident and nonresident owners both claim the credit, with nonresidents using their Form IT-203 return.
2026 changes
No material 2026 New York PTET statutory changes pinned this session. The bracket schedule (6.85% up to $2M; 9.65% over $2M to $5M; 10.30% over $5M to $25M; 10.90% over $25M) should be re-verified against the NYS DTF PTET FAQ at tax.ny.gov/bus/ptet/faq.htm before electing — re-confirm with a preparer.
Composite-return interaction
New York PTET stacks with group nonresident (composite) filing rather than forcing entities off it. Composite/group interaction with NYS withholding obligations under Tax Law §658(c)(4) is not separately pinned in the manifest for this session — consult a preparer if the entity has a mix of resident and nonresident owners and is also filing a Form IT-203-GR group return. Estimated PTET payments do not satisfy nonresident withholding requirements unless the election is formally made.
§199A QBI interaction
Per Notice 2020-75, NYS PTET reduces federal flow-through ordinary income and therefore the §199A QBI base proportionally. At the top NYS PTET bracket near 10.90%, the QBI base shrinks by roughly that percentage of allocated income before the federal 20% deduction applies — a measurable but not disqualifying offset for owners outside the §199A specified-service-trade-or-business phaseout. For SSTB owners inside the phaseout, the §199A deduction may already be partially or fully unavailable, in which case the QBI offset is moot and PTET economics are stronger.
New York PTET — common questions
State PTET law revises annually. New York'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.