Last updated on January 19th, 2026
For New York-based construction companies structured as partnerships or S corporations, 2026 offers another opportunity to opt in to New York State’s Pass-Through Entity Tax (PTET). This article will cover what the PTET is, the potential benefits of opting in, and how to make an election for 2026.
Firstly, what is a pass-through entity?
A pass-through entity is a business entity in which income “passes through” to the business owner(s) and is therefore taxed at individual federal income tax rates, rather than at the entity level. Examples of pass-through entities include partnerships, limited liability companies (LLCs), and S corporations.
What is the NYS Pass-through Entity Tax (PTET)?
The NYS PTET is an optional entity-level tax that partnerships and S corporations in New York State can elect to pay as a workaround for the federal limit on state and local tax (SALT) deductions.
What are the benefits of opting in to the PTET?
By enabling partnerships and S corporations to be taxed at the entity level rather than at the individual level, the PTET provides a workaround for the federal limit on state and local tax (SALT) deductions. Since the PTET is a deductible business expense for federal purposes, partnerships and S corporations that pay the PTET are allowed a tax deduction against their ordinary business income without regard to the SALT limit, thus lowering overall federal tax liability. Partners, members, or shareholders of an eligible partnership or S corporation may also be eligible for a PTET credit on their New York State income tax returns. Additionally, for members of partnerships, the PTET may be used as a tool for reducing self-employment taxes.
How do you opt in for the PTET?
You can make your election online via the New York Department of Taxation and Finance through your entity’s Business Online Services account. Only an authorized person can make the election on behalf of your business—your accountant or tax professional cannot make the election for you. For partnerships, an authorized person includes any member, partner, owner, or other individual with authority to bind the entity and sign returns. For S corporations, an authorized person includes any officer, manager, or shareholder authorized to make the election.
When do you have to make the election by?
The deadline for making the election is March 15 of the current tax year. Eligible entities can opt in any time from January 1 to March 15. PTET elections must be made annually, so if you are opting in for 2026, you will need to make your election via your Business Online Services account by March 15—even if you have previously opted in for prior years.
When are payments due?
Entities that opt in to the PTET must make quarterly estimated payments via the DTF’s online application by March 15, June 15, September 15, and December 15.
Consult with Your RBT CPAs Accountant
A number of factors come into play when deciding whether the PTET can benefit your business. Your RBT CPAs accountant can help you determine whether opting in to the PTET for 2026 is the right choice for you. Give us a call today and find out how we can be Remarkably Better Together.