PTET Passthrough Entity Tax Calculator 2026 (SALT Cap Workaround)

Estimate your 2026 state PTET tax paid at the entity level — and the federal income tax saved by bypassing the SALT cap. Models 14 PTET states, the post-OBBB temporary $40,000 SALT cap, and the refundable state credit on your personal return. Free, private, runs in your browser.

Business & State
Pick the state where the pass-through entity files its PTET election. 36 states + NYC have PTET regimes.
Used for the federal SALT cap and federal marginal rate.
Income Inputs
Your share of S-corp / partnership / LLC ordinary income for the year.
Used to apply the post-OBBB SALT cap phase-out (begins at $500k MAGI; reverts to $10k by $600k MFJ).
2026 OBBB brackets — 37% top rate above ~$640k MFJ.
Property tax + W-2 state tax + sales tax already on Schedule A. Used for SALT cap comparison.
Federal tax saved (PTET vs SALT cap)
$0
PTET paid at entity level
$0
SALT cap (this AGI)
$0
State PTET refundable credit
$0
Calculation Breakdown
Step Amount
2026 PTET notes: 36 states + NYC offer PTET. Most are elective and operate as a refundable credit on the owner's personal return. Connecticut's PTET is mandatory with a partial offset. PTET is fully deductible federally because IRS Notice 2020-75 confirmed it as an entity-level tax not subject to the personal SALT cap.

OBBB Act 2025 SALT cap: The personal SALT cap rose from $10,000 to $40,000 (MFJ) for 2025–2029, with a phase-out beginning at $500k MAGI that reduces the cap back toward $10,000 at $600k MAGI. PTET still wins for high earners above the phase-out and for owners with large state tax bills, since PTET is deducted at the entity level — not capped at all.

Source: IRS Notice 2020-75, state PTET statutes (e.g. NY Tax Law §860, NJ BAIT P.L.2019 c.320), and OBBB Act 2025 (P.L. 119-21) §70120 SALT cap modifications. Last updated: May 3, 2026.
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What Is PTET (Pass-Through Entity Tax)?

A Pass-Through Entity Tax (PTET) is a state-level income tax paid by an S corporation, partnership, or multi-member LLC at the entity level instead of being passed through to owners and paid at the personal level. PTET is the most popular state-level workaround to the federal $10,000 SALT cap that the Tax Cuts and Jobs Act of 2017 imposed on the deduction for state and local taxes. By paying state tax at the entity, the business deducts it federally as an ordinary trade-or-business expense — outside the SALT cap entirely. The owner then receives a refundable state credit on their personal return for the PTET already paid. As of 2026, 36 states plus New York City offer PTET regimes. Source: IRS Notice 2020-75.

The Treasury blessed this structure in November 2020 via Notice 2020-75, confirming that an entity-level state tax on partnership or S-corp income is deductible by the entity in computing federal taxable income — and is not treated as paid by the owners for SALT cap purposes. Every PTET state has since enacted a statute that mirrors this design.

How OBBB 2025 Changed the SALT Cap (and Why PTET Still Wins)

The One Big Beautiful Bill Act (P.L. 119-21, signed July 4, 2025) raised the personal SALT cap from $10,000 to $40,000 for tax years 2025 through 2029, with a phase-out that begins at $500,000 modified AGI and reduces the cap back to $10,000 by approximately $600,000 MAGI (MFJ). Single filers see the same dollar phase-out at half the income points. After 2029, the cap is scheduled to revert to $10,000 absent further action.

For pass-through owners with state tax bills above $40,000, or with MAGI above the phase-out range, PTET still produces a strictly larger federal deduction than the personal SALT cap. Owners with MAGI under $500k and total SALT under $40k may now be indifferent between PTET and personal-level SALT — though many state PTETs still help with administrative simplicity (single entity-level payment instead of personal estimated taxes). This calculator computes the post-OBBB cap based on your inputs and shows the federal tax saved by electing PTET versus relying on the personal cap.

State-by-State PTET Rates and Mechanics (2026)

PTET rates vary by state. New York City and New York State combine to exceed 14% for top earners, while Arizona is just 2.5% flat. Most states allow the owner to claim a refundable credit equal to their share of PTET paid against personal income tax on the same income — preserving net state revenue and avoiding double taxation. Connecticut is unusual: its PTET is mandatory and provides only a partial (87.5%) personal credit. Illinois, Massachusetts, Virginia, Colorado, and Arizona use a flat-rate PTET. New York, New Jersey, Maryland, Minnesota, and Oregon use graduated rates that match their personal income tax brackets.

Election timing matters. Most states require an annual election by the entity (typically March 15 for calendar-year filers) and many require quarterly estimated PTET payments. Failure to make timely estimated payments can void the federal deduction for that quarter under cash-method federal rules. Verify your state's deadline before electing — the IRS deduction follows actual entity payment, not accrual.

How to Use This Calculator

Enter your share of pass-through business income, the state where you'd elect PTET, your modified AGI (used to compute the post-OBBB SALT cap phase-out), your federal marginal rate, and other SALT items already on Schedule A (property tax + W-2 state withholding). The calculator computes (1) PTET owed at the entity level using the selected state's PTET rate, (2) the federal deduction saved versus the SALT cap given your AGI, (3) the federal tax savings at your marginal rate, and (4) the offsetting refundable state credit you claim on the personal return. Net effect is a federal tax cut equal to PTET × federal marginal rate, with no change to state tax owed. Last updated: May 3, 2026.