How to make the Montana PTET election.

Montana’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?

Partnerships and S corporations filing Form PTE can elect, including those with no Montana business activity but with Montana resident owners.

The election covers all affected owners: individuals, estates, trusts, partnerships, S corporations, and disregarded entities owned by an individual, estate, or trust. The shares of C corporations and tax-exempt owners are excluded. A separate Resident PTET election applies the tax to 100% of resident owners' distributive share, not just Montana-source income. Disregarded entities must disclose their owner to be included.

Rate: 5.65% for tax year 2026, the highest individual rate after House Bill 337 (2025), as stated in the 2025 Form PTE instructions. The instructions give 5.4% for 2027.

Affected owners' distributive share of Montana-source income, apportioned under the Multistate Tax Compact. With the Resident PTET election, resident owners' share of all income from everywhere is used instead.

Available for 2026. Created by Senate Bill 554 (2023 Mont. Laws ch. 702), with no termination date in the statute. 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
Form PTE and balance due	March 15, 2027
Extended return, election deadline	September 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: By the extended due date of Form PTE: September 15, 2027 for a calendar-year 2026 entity. Elections on late returns are reversed.

Start with 2025 Montana Form PTE, Pass-Through Entity Tax Return, from the Montana Department of Revenue.

On Form PTE for 2026 (the 2025 form is the newest), mark the PTET box in the upper left corner of page 1.
To tax 100% of resident owners' distributive share, not just Montana-source income, also mark the Resident PTET box.
Complete the Pass-Through Entity Tax Authorized Representative section at the bottom of page 2. This person makes the elections and is the only party the Department will discuss them with.
Mark the matching PTET box on each affected owner's Montana Schedule K-1.
File the return by its extended due date, September 15, 2027. Elections on late returns are reversed, and the election is irrevocable once made.

2025 Montana Form PTE, Pass-Through Entity Tax Return, page 2, showing the line used to make the Montana PTET election: Required if making a PTET Election. — The election: “Required if making a PTET Election”

Paying the tax, step by step

Required when the 2026 PTET, after flow-through payments and prior overpayments, is more than $500. Exceptions include the first year the entity elects PTET. For a calendar-year 2026 entity, payments are due April 15, June 15, and September 15, 2026, and January 15, 2027, each based on the lesser of 100% of the prior-year tax or 90% of the current-year tax. Underpayments accrue interest (7% for 2026).

What you need

An account with Montana TransAction Portal (TAP) for the business. Set it up before the first deadline.
A TAP username and password with access to the entity's account.
The entity's FEIN.
The bank routing and account numbers, or a card.

Start at Montana TransAction Portal (TAP), Montana's official site.

Log in to TAP. Its guest Make a Payment option covers billed amounts (Letter ID) only; estimated and return payments require a login.
Select the pass-through entity's account and make an estimated payment (or return payment) for the 2026 tax year.
Pay by e-check, or by credit or debit card for a small fee.
To pay by mail, send a check payable to the Montana Department of Revenue with the payment voucher from revenue.mt.gov (Form SB for S corporations, Form PR for partnerships), writing the FEIN, entity name, and tax year on the memo line.

Filing the return: Form PTE, due March 15, 2027 for a calendar-year 2026 entity. An automatic six-month extension applies to filing only, not payment.

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 Montana estimates can usually drop by the credit they expect, so the same tax is not paid twice.

Claiming the credit

Owners claim their share of PTET, shown on the Montana Schedule K-1 (Part V, line 1), as a refundable credit on Form 2 (individuals) or Form FID-3 (estates and trusts). Owners first compute Montana tax without the credit. Owners must add back any PTET deducted at the entity level.

Good to know

Publication 4 warns that S corporations using the Resident PTET election to cover resident owners' out-of-state income risk creating a second class of stock.
PTET overpayments are refunded to the entity and cannot be passed to owners as extra credit.
Nonrefundable Montana credits cannot reduce PTET and must pass to owners instead.
Nonresident owners whose only Montana-source income is covered by PTET do not need to file a Montana return.
The shares of owners not covered by PTET (for example, C corporations) may still be subject to pass-through withholding or a composite election.
Paying your personal Montana estimates? See how to pay Montana estimated taxes.
Business in more than one state? Each state has a guide of its own.

Official sources

Checked October 2026 against the Montana Department of Revenue's own publications and Mont. Code Ann. Sections 15-30-3325 through 15-30-3328.

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.