PTE Tax Election Calculator

Is a pass-through entity tax election worth it?

Enter your pass-through income, your state's PTET rate and credit, your other state and local taxes and the SALT cap. It compares federal plus state tax with and without the election, splits the difference into its causes, and finds the income at which the election starts to pay.

Planning arithmetic on your own numbers, with one flat federal rate.

1. Your pass-through income

Your share of pass-through income subject to the state PTET ($)

Other income on your return before this ($: wages, interest, other AGI)

Federal marginal rate on the change (%)

20% pass-through deduction rate that applies (%; 0 if none)

2. The state election

State PTET rate on the income (%)

State income tax rate on the same income without the election (%)

Share of the PTET payment the state credits against your personal tax (%)

3. Your other deductions

Other state and local tax you pay ($: property tax, tax on other income)

Other itemized deductions ($: mortgage interest, charity)

Standard deduction ($)

4. The SALT cap

SALT cap ($)

MAGI where the cap starts to shrink ($)

Cap lost per dollar of MAGI over that (%)

Lowest the cap can fall to ($)

Questions people ask

Does a PTET election always save federal tax?

No. It only helps when your state and local taxes already exceed the SALT deduction cap. If they fit under the cap, moving the state tax to the entity changes nothing except a smaller 20% pass-through deduction, and the election costs you money. The calculator shows which side you are on and the income at which it starts to pay.

How does a pass-through entity tax election work?

The partnership or S corporation pays state income tax itself, deducts it in computing the income that flows to you, and the state gives you a credit or exclusion so you are not taxed again on the same income. Because the deduction is taken at the entity, it is not subject to the personal SALT cap.

Why does the election lower my AGI and raise my cap?

The entity-level deduction reduces the income reported to you. The SALT cap phases out as income rises, so lower income means a higher cap, which can restore some deduction for your other state and local taxes. The calculator includes that effect.

Why does it reduce my 20% pass-through deduction?

The qualified business income deduction is a percentage of the business income that reaches your return. A PTET payment deducted at the entity lowers that income, so the deduction base shrinks. The calculator shows the lost deduction as its own line.

Is this tax advice?

No. It is arithmetic on the numbers you type in, with one flat federal rate. State rules differ on who may elect, the rate, the credit, the payment deadline and whether the election is binding, so confirm with a tax professional before electing. The defaults are placeholders.

Not decided

Whether your state lets your entity elect and which owners are covered, the true rate and credit rules, payment deadlines and estimated-payment requirements, whether the election is binding or can be revoked, how a loss, a multi-state return or a non-resident owner changes things, the alternative minimum tax, and the exact federal bracket your change lands in. This uses one flat federal rate on the change, and a 20% pass-through deduction base without its wage and property limits. The cap figures and every other default are placeholders, not current law: check them for your year.

Related tools: the SALT cap calculator (the cap and its phase-out on their own), the S corporation reasonable compensation calculator and the solo 401(k) contribution calculator.