How to make the Kentucky PTET election.

Kentucky’s Pass-Through Entity 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?

Pass-through entities (partnerships, S corporations, and LLCs taxed as either) through an authorized person who can bind the entity or sign its returns.

The election is irrevocable and binding on all entity owners. C corporation and tax-exempt owners are not counted in the PTET return. In tiered structures, an electing upper-tier entity files Form PTET-CR for the lower-tier entity's owners, and a lower-tier entity claims PTET credit it receives on Form 740-PTET, line 8.

Rate: 3.5% for 2026. KRS 141.209 imposes the individual income tax under KRS 141.020 on the electing entity, and the individual rate is 3.5% for 2026 (cut from 4% by 2025 House Bill 1).

The ordinary income and separately stated items of income calculated under KRS 141.206 (net distributive share income), multiplied by the entity's Kentucky apportionment fraction, for all owners other than C corporations and tax-exempt entities.

Available for 2026. Kentucky's pass-through entity tax election was created by 2023 House Bill 5 (2023 Ky. Acts ch. 148) at KRS 141.209 for tax years beginning on or after January 1, 2022, and the statute has no sunset. New to PTET? See how the election works.

Deadlines

Step	Due for 2026
1st estimated payment	April 15, 2026
2nd estimated payment	June 15, 2026
3rd estimated payment	September 15, 2026
4th estimated payment	January 15, 2027
Election, return, and tax	April 15, 2027
Extended return and election	October 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: The election can be made during 2026 or after year-end, but no later than April 15, 2027 (the 15th day of the fourth month), or October 15, 2027 if the return is filed under an extension.

Start with 2025 Form 740-PTET-ELECT, Kentucky Pass-Through Entity Tax Election to Pay Income Tax at the Entity Level, from the Kentucky Department of Revenue.

Choose one method: file Form 740-PTET-ELECT at any time during 2026 or after year-end, or check the election box when filing Form 740-PTET.
On Form 740-PTET-ELECT, enter the tax year, the Federal Identification Number (Item A), the LLET account number if available (Item B), and the entity's name and address (Item C).
Check the box 'Election to Pay Income Tax at the Entity Level', which reads 'Please check this box to make the election for the pass-through entity to pay tax at the entity level.'
Have an authorized member sign and date the form, then mail it to Kentucky Department of Revenue, Frankfort, Kentucky 40619-0006.
If electing on the return instead, check Item D(d), 'Election to Pay Income Tax at the entity level', on Form 740-PTET. Either way, the election is due by April 15, 2027 (October 15, 2027 if extended) and is irrevocable for the year.

2025 Form 740-PTET-ELECT, Kentucky Pass-Through Entity Tax Election to Pay Income Tax at the Entity Level, page 1, showing the line used to make the Kentucky PTET election: Please check this box to make the election. — The election: “Please check this box to make the election”

Paying the tax, step by step

Required when the KRS 141.305 test is met; the PTET instructions describe it as estimated tax reasonably expected to exceed $500 for an individual owner. Installments are 25% each, due April 15, June 15, and September 15, 2026, and January 15, 2027, paid with Form PTET-ES. The Department assesses the KRS 141.985 penalty if estimates are not properly paid; underpayment is computed on Form PTET-P.

What you need

Nothing to set up. Kentucky Electronic Payment (ePayment) site takes payments without an account.
The business's FEIN (used as the account number).
The business name, address, phone number, and email for confirmation.
The installment period, tax period, and amount.
The bank name, routing number, and account number, or a card.

Start at Kentucky Electronic Payment (ePayment) site, Kentucky's official site.

Go to epayment.ky.gov/EPAY and select Get Started. No login is required.
For Tax Type, choose PTET Estimated Payment for a 2026 installment, PTET Extension Payment for an extension payment, or PTET Payment for a bill or the balance due with the return.
Enter the business's FEIN as the tax account number, the tax period, and for estimates the estimated installment period.
Enter the payment amount and pay by ACH/electronic check (bank routing and account numbers) or credit/debit card (provider fees may apply). Future-dated payments must use ACH.
If an electronic payment is not possible, mail a check with Form 740-PTET-ES (estimates) or Form KPTET-V (return balance).

Filing the return: Form 740-PTET, with Form PTET-CR for each owner. The tax is due April 15, 2027 for a calendar-year 2026 entity (the same date as the entity's annual return, without regard to extensions). A six-month filing extension is available on Form 740-PTET-EXT or with a copy of federal Form 7004.

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

Claiming the credit

Owners receive a refundable credit equal to 100% of their proportionate share of the PTET paid, reported to them on Form PTET-CR. Individuals claim it on Form 740 or Form 740-NP, line 31(g), Refundable Pass-Through Entity Tax Credit.

Good to know

Owners' nonrefundable Kentucky tax credits from their Schedules K-1 reduce the PTET computed at the entity level (Form 740-PTET, line 6).
Corporations and pass-through entities must pay PTET electronically; a Form KPTET-V voucher is used only for paper checks.
PTET is tied to the individual rate, so the 2026 individual rate cut to 3.5% also lowers the PTET rate.
Paying your personal Kentucky estimates? See how to pay Kentucky estimated taxes.
Business in more than one state? Each state has a guide of its own.

Official sources

Checked October 2026 against the Kentucky Department of Revenue's own publications and KRS 141.209.

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.