How to make the Minnesota PTET election.

Can your business elect?

Partnerships, S corporations (including qualified subchapter S subsidiaries), and LLCs taxed as either can elect if they have at least one qualifying owner. Publicly traded partnerships cannot elect.

The election must be made by qualifying owners holding more than 50% of the ownership held by qualifying owners, and it binds all qualifying owners. Qualifying owners are resident or nonresident individuals and estates, trusts that own S corporation shares, and disregarded entities owned by a qualifying owner. Partnerships, LLCs, corporations, and non-grantor trusts in a partnership are not qualifying owners and are excluded. No owner needs to be subject to the federal SALT limit.

Rate: 9.85%, the highest Minnesota individual income tax rate.

For partnerships: all of a resident partner's distributive income, plus nonresident partners' Minnesota-source income. For S corporations: Minnesota-source income for both resident and nonresident shareholders.

Available for 2026. The tax previously expired with the federal SALT cap provision in IRC Section 164(b)(6)(B). 2026 Minn. Laws ch. 128 (H.F. 2438, signed May 27, 2026) replaced that link with a fixed end date, effective retroactively from January 1, 2026, so the tax applies to tax years beginning before January 1, 2028. 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: By the due date or extended due date of the entity's 2026 return. For a calendar-year entity on extension, that is September 15, 2027. Late elections are not accepted.

Start with 2025 Schedule PTE, Pass-through Entity Tax, from the Minnesota Department of Revenue.

1. Get the approval of qualifying owners who together hold more than 50% of the part of the entity owned by qualifying owners. The election then binds all qualifying owners.
2. Complete Schedule PTE, Pass-Through Entity Tax, for 2026. Partnerships with any Minnesota resident partners also complete Schedule PTE-RP.
3. On Form M3, check the 'Pass-Through Entity (PTE) Tax' box. Carry Schedule PTE line 31 to Form M3, line 2, or Form M8, line 3, as the 2025 schedule directs.
4. File Schedule PTE with Form M3 (partnerships) or Form M8 (S corporations) by the extended due date, September 15, 2027. The election can also be made on an amended return filed by that date, and it can be revoked only until March 15, 2027.

1

Paying the tax, step by step

Four equal installments are paid through e-Services. For a calendar-year entity, they are due April 15, June 15, and September 15, 2026, and January 15, 2027. For 2026 only, the first-quarter payment is timely if paid by the second-quarter due date (June 15, 2026). No additional tax charge applies if payments equal at least the lesser of 90% of the current-year tax or 100% of the prior-year tax.

What you need

• An account with Minnesota e-Services for the business. Set it up before the first deadline.
• The entity's Minnesota tax ID number and FEIN.
• An e-Services username and password.
• Routing and account numbers for a U.S. bank account.

Start at Minnesota e-Services, Minnesota's official site.

1. Log in to e-Services for businesses. First-time users can call 651-282-5225 or 1-800-657-3605 for a temporary password.
2. Make the payment from the partnership's or S corporation's own business tax account. Payments cannot later be moved between an owner's individual account and the entity's account.
3. Pay the PTE estimate the same way the entity pays other entity-level estimates (nonresident withholding, composite tax), for the 2026 tax year, in four equal installments.
4. Finish the transaction and receive a confirmation number by the due date. Payments must come from a U.S. bank account.
5. If the entity is not required to pay electronically, it can pay by check: go to Make a Payment, select Check, and print a voucher from the Payment Voucher System.

Filing the return: Schedule PTE filed with Form M3 or Form M8, due March 15, 2027 for a calendar-year entity. An extension to file is not an extension to pay.

Claiming the credit

Qualifying owners claim a refundable credit equal to their PTE tax liability on Schedule M1REF (individuals) or Form M2 (estates and trusts). The credit is allowed only if the entity pays the tax.

Good to know

• PTE estimated payments by the entity satisfy the owner's estimated tax duty for the PTE-covered liability. Estimated payments cannot be moved between an owner's individual account and the entity's account.
• Nonresident owners with no other Minnesota-source income can have the PTE return satisfy their filing requirement. Owners with installment sale income cannot.
• The 1% Minnesota net investment income tax on net investment income above $1 million cannot be paid through the PTE tax.
• Resident owners can claim a credit for an entity-level tax paid to another state that is similar to Minnesota's PTE tax, through 2027.
• Once owners claim the credit, the entity cannot get a refund of that tax. Owners must file Form M1X instead.
• Paying your personal Minnesota estimates? See how to pay Minnesota estimated taxes.
• Business in more than one state? Each state has a guide of its own.

Official sources

Checked October 2026 against the Minnesota Department of Revenue's own publications and Minn. Stat. Section 289A.08, subd. 7a; credit at Section 290.06, subd. 40.

• Minnesota Department of Revenue: Pass-Through Entity (PTE) Tax (updated Aug. 26, 2026)
• 2026 Minn. Laws ch. 128 (H.F. 2438), art. 2, secs. 9, 13, 16, 17
• Minn. Stat. Section 289A.08 (with 2026 amendment notes)
• Minnesota Department of Revenue: Estimated Tax Payments for S Corporations
• Minnesota Department of Revenue: Partnership Due Dates
• Minnesota Department of Revenue: S Corporation Due Dates
• 2025 Schedule PTE and instructions
• 2025 Form M3 Instructions (PTE checkbox and payment options)
• Minnesota Revenue: Make a Payment

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.