New York State: Pass-Through Entity Tax Law Article 24-A

The pass-through entity tax (PTET) under new Tax Law Article 24-A1 is an optional tax that partnerships or New York S corporations may annually elect to pay on certain income for tax years beginning on or after January 1, 2021.  If a partnership or New York S corporation elects to pay PTET, partners, members, or shareholders of an electing partnership or New York S corporation (“electing entity”) who are subject to tax under Article 22 may be eligible for a PTET credit on their New York State income tax returns.

The recent announcement from the New York State Tax Department (TSB-M-21(1)C, (1)I), provides more insights regarding the instructions and the mechanics. We expect several other states will soon roll-out a similar Technical Memorandum regarding the election. New York is one of many states to allow pass-through entities (PTET) the option to pay state income tax on behalf of the partners, members, or shareholders.  We can answer your questions to the possible tax benefits.  Please reach out to Spicer Jeffries LLP Tax Department to discuss your questions.

Read the ENTIRE New York State Department of Taxation and Finance Technical Memorandum (TSB-M-21(1)C, (1)1) here: