How to make the Colorado PTET election.

Can your business elect?

Partnerships and S corporations, including LLCs taxed as either.

The election binds all partners and shareholders, resident and nonresident; owners cannot opt out. The only exception is a partner that is a C corporation unitary with the partnership. An owner whose net income from the entity is negative is left out of the tax calculation. A lower-tier election does not require an upper-tier partnership or S corporation to elect.

Rate: 4.4%. By statute the rate is the Colorado corporate income tax rate for the year (C.R.S. Section 39-22-301), which is 4.4% for 2026 because no TABOR-triggered temporary rate reduction applies for tax year 2026.

The sum of each resident owner's share of all entity income and each nonresident owner's Colorado-source share, with Colorado modifications (Columns A and B of Form DR 0106K). Guaranteed payments are excluded.

Available for 2026. The SALT Parity Act (HB 21-1327, amended by SB 22-124) is allowed in any income tax year in which the federal limit on individuals' state and local tax deduction applies, and that limit continues for 2026. 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: The election can be made during 2026 on Form DR 1705 or Form DR 0106EP, or on the 2026 Form DR 0106 when it is filed (due April 15, 2027, or October 15, 2027 with the automatic extension).

Start with 2025 Form DR 0106 (return page), from the Colorado Department of Revenue.

1. To elect during 2026 with an estimated payment, mark the SALT Parity Act election box at the top of the 2026 Form DR 0106EP payment form and mail it with the check.
2. To elect during 2026 without a payment, file Form DR 1705, SALT Parity Act Election Form.
3. Otherwise, or in addition, mark Box I on page 1 of the 2026 Form DR 0106 ('If this partnership or S corporation is electing to be subject to tax at the entity level under the SALT Parity Act'). Mark it even if DR 1705 or DR 0106EP was already filed.
4. Complete Part III, SALT Parity Act Income Tax Return, of Form DR 0106 and skip Part II (composite).
5. Check the SALT Parity Election box on every owner's Colorado K-1 (Form DR 0106K). The election binds all owners and cannot be revoked for the year.

1

Paying the tax, step by step

Required if the SALT Parity tax will exceed $5,000, under the C corporation rules. Four installments of 25% of the required annual payment (the lesser of 70% of current-year tax or 100% of prior-year tax, the latter only if the entity elected for the prior year) are due April 15, June 15, September 15, and December 15, 2026 (all weekdays), on Form DR 0106EP or Revenue Online. The penalty is computed on Form DR 0233.

What you need

• Nothing to set up. Revenue Online takes payments without an account.
• The entity's Colorado Account Number or FEIN (the same account number used on Form DR 0106).
• The installment amount: 25% of the required annual payment.
• The business bank account routing and account numbers for e-check, or a card (a processing fee may apply).

Start at Revenue Online, Colorado's official site.

1. Go to Revenue Online. A login is not required to make a payment.
2. In the Payment Options box on the home page, click Make a Payment, then choose E-Check or Debit or Credit Card.
3. Complete Step 1, Enter Taxpayer Information, then click Add/Edit Payment and Add Payment.
4. Choose the account type for the partnership or S corporation, enter the Colorado Account Number, the period end date (12/31/2026), the payment type (Estimated Payment or Return Payment), and the amount. If the account type is not listed, sign in to Revenue Online to pay.
5. Click Add, then OK, then Pay Online and follow the prompts. Payers who pay by check mail it with Form DR 0106EP; DR 0106EP is not sent when paying online.

Filing the return: Form DR 0106, Part III, with Colorado K-1s (Form DR 0106K) for every owner. Due April 15, 2027 for calendar year 2026, with an automatic six-month extension to October 15, 2027 for filing only. A delinquent payment penalty applies if 90% of the tax is not paid by April 15, 2027.

Claiming the credit

Each owner gets a refundable credit for its share of the tax the entity actually paid, reported on Form DR 0106K, and any excess over Colorado tax is refunded. Owners must file their own Colorado returns to claim it. A nonresident individual whose only Colorado-source income is from the electing entity does not have to file.

Good to know

• Every owner of an electing entity must add back the full federal qualified business income deduction (IRC Section 199A) and their share of state income tax deducted by the entity.
• An electing entity cannot file a composite return for nonresident owners and does not need Form DR 0107 agreements for the year.
• The entity cannot claim any Colorado income tax credits itself; all credits pass through to owners.
• An upper-tier partnership or S corporation cannot claim a credit for tax paid by an electing lower-tier partnership; the credit passes to its owners on the 'SALT Parity credit from lower-tier partnership' line of Form DR 0106K.
• Paying your personal Colorado estimates? See how to pay Colorado estimated taxes.
• Business in more than one state? Each state has a guide of its own.

Official sources

Checked October 2026 against the Colorado Department of Revenue's own publications and C.R.S. Section 39-22-340 et seq. (election in Section 39-22-343, tax in Section 39-22-344).

• Income Tax Topics: SALT Parity Act (revised October 2025)
• 2025 Form DR 0106 and instructions
• 2026 Form DR 0106EP estimated tax instructions
• Colorado Corporate Income Tax Guide, March 2026 (rates and estimated payments, Part 9)
• SB 22-124 signed act (sets the rate at the Section 39-22-301 corporate rate)
• Colorado State Auditor report on federal tax law provisions (quoting C.R.S. 39-22-343(2))
• Legislative Council Staff September 2026 revenue forecast (no TABOR refunds for tax year 2026)
• 2025 Form DR 0106 PDF (Box I on page 13), sites/tax path
• CDOR Pay by Credit/Debit Card or E-Check (Revenue Online steps)
• Revenue Online

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.