How to make the Alabama PTET election.

Can your business elect?

Alabama S corporations (as defined in Ala. Code Section 40-18-160) and Subchapter K entities (partnerships and LLCs taxed as partnerships). Single-member LLCs, estates, trusts, business trusts, and disregarded entities cannot elect on their own; they can only be owners of an electing entity.

The election covers every owner. The entity cannot exclude any owner's share, including the share of a tax-exempt owner. The election requires a vote or written consent of the governing body and of owners holding more than 50% of voting control. In a tiered structure, each tier must make its own election.

Rate: 5%, the top individual rate under Ala. Code Section 40-18-5, applied to Alabama taxable income.

The entity's total Alabama-apportioned income: nonseparately and separately stated income and deductions (Schedule K, lines 1 to 17, Alabama column), including guaranteed payments. Net operating loss carryforwards cannot be used, and no owner's share can be excluded.

Available for 2026. The Electing Pass-Through Entity tax was created by Act 2021-1 for tax years beginning on or after January 1, 2021, and has no end date. New to PTET? See how the election works.

Deadlines

These dates are for a calendar-year business. Pay at least two business days early, since state payment sites slow down on deadline days.

Electing, step by step

Deadline: For a calendar-year 2026 entity, the election is made on the 2026 Form 65 or Form 20S filed by its due date, including extensions (March 15, 2027, or September 15, 2027 if extended). It cannot be made by amending the return after the extended due date.

Start with 2025 Form 65, from the Alabama Department of Revenue.

1. Approve the election by a vote or written consent of the governing body and of owners holding more than 50% of the entity's voting control.
2. Open the Form 65 (partnerships) or Form 20S (S corporations) for the 2026 tax year.
3. Check the ELECTING PTE box in the header of page 1. The box must be checked every year the election is in effect.
4. Complete Form EPT (Electing Pass-Through Entity Payment Return) and Schedule EPT-K1 for the owners.
5. File Form EPT and Schedule EPT-K1 with the Form 65 or Form 20S by its due date, including extensions.

1

Paying the tax, step by step

Required if Alabama tax will exceed $500. Four installments of 25% of the required annual payment (the lesser of 100% of current-year or 100% of prior-year tax) are due April 15, June 15, September 15, and December 15, 2026, using Form PTE-V or My Alabama Taxes. Late or short payments incur interest plus a 10% penalty, and any single payment of $750 or more must be made electronically.

What you need

• An account with My Alabama Taxes (MAT) for the business. Set it up before the first deadline.
• A My Alabama Taxes login (sign-on ID and access code) for the business's account.
• The business bank account routing and account numbers for the ACH debit.
• The installment amount: 25% of the required annual payment.

Start at My Alabama Taxes (MAT), Alabama's official site.

1. Log in to My Alabama Taxes (MAT).
2. Under Accounts, select Pass-Through Entity.
3. Click the Filing Period link for the 2026 period.
4. In the I Want To section, click Make a Payment and pay by ACH debit.
5. To pay by check instead (allowed only for a payment under $750), mail it with Form PTE-V to the address on the form.

Filing the return: Form EPT (Electing Pass-Through Entity Payment Return), filed with Form 65 or Form 20S and Schedule EPT-K1. For 2026 it is due March 15, 2027. An extension moves the filing date to September 15, 2027, but the tax is still due March 15, 2027.

Claiming the credit

Each owner reports its distributive share of income on its own Alabama return and claims a refundable credit for its share of the tax paid by the entity. The entity reports each owner's share of income and tax on Schedule EPT-K1. Owners with no other Alabama filing requirement do not have to file, but must file to claim the credit.

Good to know

• An electing entity is exempt from the nonresident composite payment requirement (Form PTE-C) for the year.
• The 2017 Historic Rehabilitation Tax Credit, the Railroad Modernization Act credit, and the 2025 Rural Hospital Investment Program credit are claimed at the entity level on Schedule EPT-C. Other credits pass through to owners on Schedule PC.
• If an entity made estimated payments but does not elect, it can request a refund on Form PTE-C.
• For the first election year, the prior-year safe harbor is 5% of the prior year's apportioned Schedule K income. It does not apply to an S corporation that reported a Schedule K loss.
• Paying your personal Alabama estimates? See how to pay Alabama estimated taxes.
• Business in more than one state? Each state has a guide of its own.

Official sources

Checked October 2026 against the Alabama Department of Revenue's own publications and Ala. Code Section 40-18-24.4 (Act 2021-1, amended by Act 2021-423 and Act 2024-113); Ala. Admin. Code r. 810-3-36-.01.

• ADOR Electing Pass-Through Entities page
• ADOR Electing Pass-Through Entity FAQs
• ADOR press release on Act 2024-113 election deadline (May 1, 2024)
• 2025 Form EPT and Schedule EPT-K1 instructions
• 2025 Schedule EPT-C instructions
• Ala. Admin. Code r. 810-3-36-.01, Electing Pass-Through Entity Returns
• 2025 Form 65 (Electing PTE box)
• 2025 Form 20S (Electing PTE box)
• ADOR estimated payment guidance for electing pass-through entities (MAT payment path)
• ADOR Make a Payment page

This guide is for general education and reflects rules as of October 2026. Tax law and agency websites change, and your situation may have details that change the answer. Please talk with your tax professional before acting on it.