How to make the New Mexico PTET election.

New Mexico’s Entity-Level 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 that file Form PTE (partnerships and LLCs taxed as partnerships), Form S-Corp (S corporations), or Form FID-1 (fiduciaries) may elect. The entity cannot pay the tax on shares belonging to certain owners (see owner rules).

The election is binding on all owners whose income is included in the entity's distributed net income. The entity may not pay entity-level tax for owners that are governments, tribes, 501(c)(3) organizations, corporate partners that include the income in unitary business income, or pass-through entities; those owners get no credit, and the entity still withholds for them if they are nonresidents.

Rate: 5.9% in the 2025 instructions. By statute the rate equals the higher of the top personal and top corporate income tax rates for the year; no 2026 change to either rate was found.

New Mexico net income plus guaranteed payments, less the New Mexico net capital gains deduction and less income distributed to owners the entity may not pay tax for. Only New Mexico-allocated or apportioned income is taxed.

Available for 2026 based on current law and guidance. The annual entity-level tax election is in Section 7-3A-10 NMSA 1978, and House Bill 368 (2023) replaced the original income exemption with a refundable owner credit starting in tax year 2023. No sunset appears in the statute or guidance. New to PTET? See how the election works.

Deadlines

Step	Due for 2026
Owner statements (RPD-41359)	February 15, 2027
Elect, file, and pay	March 15, 2027
Extended return	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: The election is made on the entity's 2026 New Mexico return, due on the federal return due date: March 15, 2027 for a calendar-year partnership or S corporation.

Start with 2025 Form PTE, New Mexico Pass-Through Entities Tax Return, from the New Mexico Taxation and Revenue Department.

Prepare the 2026 Form PTE (partnerships), Form S-Corp (S corporations), or Form FID-1 in Taxpayer Access Point (TAP) or approved software. A Form PTE with 51 or more New Mexico payees must be filed electronically.
On Form PTE, complete Section 4, 'Computation of entity-level tax,' lines 22 through 29. Leaving Section 4 blank means no election.
On line 26, enter distributions to owners the entity may not pay entity-level tax for: governments, tribes, 501(c)(3) organizations, unitary corporate partners, and pass-through entity owners.
Complete Schedule PTE-D for each owner, including line 12, the owner's share of entity-level tax.
Give each owner Form RPD-41359 showing its share of the tax by February 15, 2027, and file the return by March 15, 2027. The election cannot be made or changed on an amended return.

2025 Form PTE, New Mexico Pass-Through Entities Tax Return, page 2, showing the line used to make the New Mexico PTET election: if electing to file and pay entity-level tax. — The election: “if electing to file and pay entity-level tax”

Paying the tax, step by step

Estimated payments are required annually, not quarterly. The requirement is met by paying the tax by the due date of the return. Optional earlier payments may be made with Form PTE-ES or through Taxpayer Access Point (TAP).

What you need

Access to Taxpayer Access Point (TAP).
The entity's FEIN and New Mexico Business Tax Identification Number (NMBTIN).
A TAP logon, if paying from the entity's account.
Checking account routing and account numbers for an electronic check, or a credit card.

Start at Taxpayer Access Point (TAP), New Mexico's official site.

Go to Taxpayer Access Point (TAP). Pay from the entity's logged-in account, or use TAP's option to make a business payment without a logon.
Apply the payment to the entity's pass-through entity income tax account for tax year 2026.
Pay by electronic check at no charge, or by credit card with a convenience fee. TAP can schedule a payment up to 180 days ahead.
Pay the full entity-level tax by March 15, 2027. An extension of time to file does not extend the time to pay.
To pay by mail, send a check payable to NM Taxation & Revenue Dept. with Form PTE-ES (estimated), PTE-EXT (extension), or PTE-PV (return payment).

Filing the return: Form PTE (partnerships), Form S-Corp (S corporations), or Form FID-1, with Schedule PTE-D, due on the due date of the federal return. An IRS extension is accepted if a copy accompanies the return, or Form RPD-41096 may be filed; an extension does not extend the time to pay.

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

Claiming the credit

Owners claim a credit for their share of entity-level tax on PIT-1 line 29, the same line as pass-through withholding, or on their corporate return. Under Section 7-3A-10 any credit above the owner's tax is refunded. The entity reports each owner's share on Form RPD-41359 by February 15 of the following year.

Good to know

Owners cannot use a Schedule K-1 to claim the credit; Form RPD-41359 is the only document that supports it.
Nonresident withholding still applies to owners the entity cannot pay entity-level tax for, and one return can report withholding, composite tax, and entity-level tax.
The department's FAQ says entities with net operating losses should not elect at present, pending rules on NOLs.
Owner-specific income tax credits cannot be claimed by the entity against entity-level tax, except the Film Production Tax Credit.
Paying your personal New Mexico estimates? See how to pay New Mexico estimated taxes.
Business in more than one state? Each state has a guide of its own.

Official sources

Checked October 2026 against the New Mexico Taxation and Revenue Department's own publications and Section 7-3A-10 NMSA 1978.

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.