How to make the California PTET election.

California’s Pass-Through Entity Elective Tax lets your business pay state income tax for its owners and deduct it federally, outside the SALT cap. Here’s when and how to elect for 2026, and how to pay.

Can your business elect?

Entities taxed as partnerships or S corporations, including LLCs taxed as either, that do business in California and must file a California return. Publicly traded partnerships and entities permitted or required to be in a combined reporting group cannot elect. FTB guidance says an entity can elect even if it has partnership, corporate, or disregarded-entity owners, but those owners do not get the credit.

Only qualified taxpayers who consent are included: individuals, fiduciaries, estates, and trusts subject to California personal income tax, and disregarded single-member LLCs owned by them. A consenting owner's entire share of income and guaranteed payments is included; nonconsenting owners do not block the election and their income is left out. Partnerships, corporations, and other disregarded entities are not qualified taxpayers.

Rate: 9.3% of qualified net income.

Qualified net income: the sum of each consenting qualified taxpayer's pro rata or distributive share of income and guaranteed payments subject to California personal income tax. For residents this is the full share; for nonresidents it is the California-source share. Gain on the sale of an ownership interest is not included.

Available for 2026. The original program (AB 150 of 2021) covered 2021 through 2025. SB 132 (Stats. 2025, Ch. 17) created a new elective tax and credit for taxable years beginning on or after January 1, 2026, and before January 1, 2031, operative because the federal SALT deduction cap was extended. New to PTET? See how the election works.

Deadlines

Step	Due for 2026
Payment 1 (June payment)	June 15, 2026
Payment 2 (balance due)	March 15, 2027
Original return with election	March 15, 2027

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: Made on the timely filed original 2026 return (due March 15, 2027, or later if filed under a valid extension). The election cannot be made on an amended return. A June 15, 2026 payment was also due; for 2026 a missed or short payment no longer voids the election but reduces owners' credits.

Start with 2025 Form FTB 3804, from the California Franchise Tax Board.

Identify the qualified taxpayers (individuals, fiduciaries, estates, trusts, and their disregarded SMLLCs) who consent to include their share of income and guaranteed payments. Owners who do not consent are left out.
Complete Form FTB 3804, Part II, Schedule of Qualified Taxpayers: list each consenting owner with box a (share of income and guaranteed payments) and box b (9.3% credit amount).
In Part I, total the box a amounts on line 1 and multiply by 9.3% on line 3. Enter the line 3 elective tax on Form 100S, line 29; Form 565, line 25; or Form 568, line 4.
Attach Form FTB 3804 to the timely filed original Form 100S, 565, or 568. The election cannot be made on an amended return and is irrevocable once made.

2025 Form FTB 3804, page 1, showing the line used to make the California PTET election: This is the total amount of elective tax. — The election: “This is the total amount of elective tax”

Paying the tax, step by step

Payment 1, due June 15, 2026, is the greater of $1,000 or 50% of the elective tax paid for 2025. For 2026 through 2030, a missed or short Payment 1 no longer voids the election, but each owner's credit is reduced by 12.5% of the owner's pro rata share of the unpaid amount, and errors cannot be corrected after June 15. Payment 2, the balance, is due March 15, 2027 without regard to extensions, and is paid through Web Pay, EFW, or Form FTB 3893, separate from other entity payments.

What you need

Nothing to set up. FTB Web Pay (business) takes payments without an account.
The entity's California SOS file number, FTB issued ID, or California corporation number.
The Payment 1 amount: the greater of $1,000 or 50% of the elective tax paid for 2025.
The business bank account routing and account numbers.

Start at FTB Web Pay (business), California's official site.

Go to FTB Web Pay and choose Business.
Identify the entity (partnerships and LLCs use the SOS number, or the FTB issued ID if the SOS number does not work).
Designate the payment as a PTE payment for the 2026 taxable year. It cannot be combined with the entity's other tax payments, such as estimated tax or the annual tax.
Pay from the business checking or savings account, either immediately or scheduled up to a year in advance.
If paying by check instead, mail it with Form FTB 3893 to Franchise Tax Board, P.O. Box 942857, Sacramento, CA 94257-0531. Do not file FTB 3893 when paying by Web Pay or EFW.

Filing the return: Form 565 (partnerships), Form 568 (LLCs), or Form 100S (S corporations) with Form FTB 3804. All elective tax must be paid by March 15, 2027, even if the return is extended.

Keep the PTE elective tax separate from your personal estimates. The business pays the PTE elective tax from its own account under its own ID. Once it does, each owner's personal California estimates can usually drop by the credit they expect, so the same tax is not paid twice.

Claiming the credit

Consenting owners claim a nonrefundable credit equal to 9.3% of their share of qualified net income (less any 12.5% reduction for an underpaid June 15 payment) on Form FTB 3804-CR, with Schedule P. Unused credit carries forward up to five years. The entity reports each owner's share on Form FTB 3804 and the owner's Schedule K-1.

Good to know

The entity must add back any PTE elective tax deducted for federal purposes when computing California net income.
The PTE elective tax is not part of the entity's estimated tax computation, but the credit does reduce owners' own required estimated payments. The credit cannot reduce the 1% behavioral health services tax.
The election does not change the 7% nonresident withholding requirement, and the credit cannot be claimed on a nonresident group return.
For the other state tax credit, owners must increase net tax by the PTE credit used in the same year, so the PTE credit effectively applies first. The PTE credit can also reduce tax below the tentative minimum tax.
When June 15 or the March 15 balance due date falls on a weekend or holiday, FTB treats a payment on the next business day as timely. Both 2026 tax year dates (June 15, 2026 and March 15, 2027) fall on Mondays.
Paying your personal California estimates? See how to pay California estimated taxes.
Business in more than one state? Each state has a guide of its own.

Official sources

Checked October 2026 against the California Franchise Tax Board's own publications and Cal. Rev. and Tax. Code Sections 19910 to 19916 (Part 10.4.1, Small Business Relief Act) and Section 17052.11, added by SB 132 (Stats. 2025, Ch. 17).

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.