PTET State-by-State Reference: Election, Payment & Refund Mechanics

All 50 States + DC — 2025/2026 Tax Year — Companion to State Extension Requirements Table

2025/2026 Critical Updates: (1) OBBBA raised the federal SALT cap from $10K to $40K for 2025-2029 (phaseout above $500K MAGI) — re-evaluate every PTET election; benefit is reduced for owners under the cap. (2) California PTET extended through 2030 (SB 132); for 2026+ the June 15 prepayment is no longer disqualifying but missing it reduces owner credit by 12.5%. (3) Minnesota PTE Tax expired for tax years beginning after 12/31/2025 — payments made for 2026+ will be treated as regular estimated tax. (4) Illinois PTE Tax made PERMANENT (was scheduled to sunset 1/1/2026). (5) Michigan election deadline extended to last day of 9th month after year-end (e.g., 9/30/2026 for 2025 calendar year). (6) Alabama election now made on the return (incl. extensions) starting 2025. (7) Oklahoma election deadline now aligned with extended return due date. (8) North Carolina PET rate dropping: 4.5% (2024) → 4.25% (2025) → 3.99% (2026+). (9) Virginia PTET sunset extended to 1/1/2027 (one year). (10) MAINE NEWLY ENACTED PTET on 4/10/2026 (LD 2212) — effective 1/1/2026, ~7.15% rate, 90% refundable owner credit. (11) Pennsylvania, Delaware, North Dakota, DC, Vermont still have NO PTET enacted.
⚠ Mandatory-Aspect Traps (states tagged "Mandatory/Hybrid"): WI: PW-1 nonresident withholding mandatory; 12%/yr underpayment interest; 7.9% PTET rate inverted vs 7.65% individual rate. OH: IT 4738 due 4/15 NOT 3/15 (different from 1065/1120S); estimates are cumulative 22.5/45/67.5/90% (not flat 25%); IT 1140 mandatory withholding for nonresidents if no PTE election; election binds ALL owners. CT: 87.5% owner credit (built-in 12.5% inefficiency); mandatory composite return for nonresidents reinstated 2024+. IL: 1.5% Replacement Tax mandatory regardless of PTE election; pass-through withholding mandatory for nonresidents unless IL-1000-E filed; partners directly liable if PTE doesn't pay. MD: Election irrevocable on FIRST FILING of year (could be 510/511D estimate, 510/511E extension, or year-end Form 511 — first one wins); mandatory Form 510 for nonresident tax if not electing.
Status: Elective PTET Mandatory/Hybrid No PTET Expired No income tax   Entity: 1065 1120S
State PTET Status Election Form & Deadline Tax Rate / Calculation Quarterly / Estimate Schedule Overpayment Treatment Eligible Entities DOR Link & Practice Notes

Accrual Basis & Fiscal Year Considerations (Apply Across All States)

Pass-through entities on the accrual method generally cannot deduct PTET federally until actually paid — IRS Notice 2020-75 and §461(h) require economic performance. The recurring item exception may permit accrual deduction if the PTET is paid on or before the earlier of (a) the date the return is filed, or (b) 8.5 months after year-end — but only if treatment is consistent and the item is recurring. Practical rule: get the PTET cash out the door by 12/31 (or for sure by the earlier of return-filing or 9/15 of the following year for 6-month-extended calendar filers). Fiscal-year filers: most state PTET deadlines key off the entity's own tax year (e.g., "15th day of the 3rd month after year-end"), not 3/15. Election deadlines, quarterly estimates, and June 15 prepayments (CA) all shift correspondingly. CA SB 132 explicitly clarified that fiscal-year owners with FY beginning in 2025 but ending before 1/1/2026 claim the credit on their 2026 individual returns.

Overpayment Treatment — Three Patterns

REFUND ONLY: NY (statutory — physical check issued, NO carryforward); MN (during phase-out); some others. Most aggressive pattern — entity gets cash back but cannot apply to next year's PTET. CARRYFORWARD: NJ allows carryforward only if BAIT election is made for the following year. REFUND OR CARRYFORWARD: CA (overpayment can be applied to next year's LLC annual tax/fee or S-corp estimates, but NOT designated as June 15 PTET prepayment); IL, MA, GA, and most other states give the entity a choice on the return. Owner-level credits are a separate issue: most states issue refundable credits to owners (NJ, MN, OH, CT, others); some are non-refundable with carryforward (CA = 5-year carryforward; IL; AZ); a few are non-refundable with no CF.

Federal Deductibility & K-1 Mechanics

PTET paid by the entity reduces non-separately stated ordinary income on Form 1065/1120S, flowing through as lower pass-through income to owners (IRS Notice 2020-75). Resident-state credit availability for taxes paid to another state's PTET varies — NY and VA legislation explicitly grants resident credits for partner-level PTET; PA generally does NOT for partnerships (only S-corps), creating double-tax exposure. Always model the resident credit before electing in another state.

Election Permanence

Annually elected, irrevocable for the year: CA, NY, NJ, IL, MD, most others. Multi-year binding: Michigan election binds for 3 years. Once-elected, opt-out required: some states. Verify election permanence before electing — particularly Michigan's 3-year lock.

Sources & Disclaimer

Compiled from state DOR sites, AICPA SALT TRP, EisnerAmper PTET update (Feb 2026), Smith+Howard 2025 Update, Spidell, Grant Thornton SALT Alerts, NY Tax Dept, NJ Treasury, CA FTB, MN DOR, IA DOR, NE DOR. Verify every payment, form, deadline, and rate directly with the state DOR before filing. PTET is among the most rapidly changing areas of state tax — assume rates and procedures may have changed in the last 60 days. This table does not address NYC UBT, Philadelphia BPT/NPT, or other local-level workarounds.