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Pass-Through Entity (PTE) Tax

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The Pass-Through Entity (PTE) Tax allows an entity to pay a tax on behalf of their partners, members, or shareholders.

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Electing PTE

Qualified entities may elect to pay PTE tax if owners who collectively control more than 50% of the entity decide to do so, and the entity meets all other election requirements. Once made, the election is binding on all owners and cannot be revoked after the original due date.

PTE tax is calculated by multiplying the entity’s Minnesota source income by the highest Minnesota individual income tax rate, which is currently 9.85%.

The PTE tax election is available for an entity’s tax years beginning after December 31, 2020.

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