How to make the Virginia PTET election.

Can your business elect?

Any pass-through entity, including partnerships, LLCs, LLPs, business trusts, and S corporations. Since taxable year 2023, the entity no longer has to be 100% owned by natural persons or persons eligible to hold S corporation stock. An entity that does not do business in Virginia can elect to pay on behalf of its Virginia resident owners.

The tax applies only to the shares of eligible owners: direct owners who are individuals, estates, or trusts subject to Virginia income tax. Entity owners are not covered. The entity must get consent from its eligible owners, but once made the election binds all eligible owners and they cannot opt out. Only direct owners can claim the credit; a credit allocated to an estate or trust cannot pass to its beneficiaries.

Rate: 5.75% flat rate.

Virginia taxable income attributable to eligible owners only: their full distributive shares for Virginia residents, and only Virginia-source income for nonresident eligible owners. The federal deduction for state and local income taxes must be added back. An S corporation with both resident and nonresident owners may compute income as if all owners were nonresidents.

Available for 2026 and later. The tax was created by the 2022 General Assembly, a 2025 law (2025 Acts c. 725) extended it through taxable year 2026, and the 2026 Amendments to the 2025 Appropriation Act (2026 Acts c. 7) removed the end date, making it permanent. 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 of Form 502PTET, including extensions. For a calendar-year 2026 entity, that is April 15, 2027, or October 15, 2027 under the automatic extension.

Start with 2025 Form 502PTET (in the 2025 Form 502PTET Instruction Package), from the Virginia Department of Taxation.

1. Get consent from the eligible owners. Once made, the election binds all of them.
2. To elect early, make a 2026 estimated or extension payment with eForm PTET-PMT. The payment itself makes the election.
3. Otherwise, file Form 502PTET (instead of Form 502) electronically through the Federal/State e-File program or Online Services for Businesses by October 15, 2027. Paper returns are not accepted.
4. On page 1 of Form 502PTET, mark the first box, 'Check here to certify election to pay Virginia income tax at the entity level for the taxable year.' Without it, the election is invalid.
5. Include Schedule PTET ADJ, a Schedule VK-1 for each owner, Schedule 502A if the business operates both inside and outside Virginia, and the federal Form 1065 or 1120-S with Schedule K as a linked return.

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Paying the tax, step by step

Required if the 2026 PTET is expected to exceed $1,000. Calendar-year entities pay 25% by each of April 15, June 15, September 15, and December 15, 2026, electronically through eForms (Form PTET-PMT) or ACH credit. Underpayments incur an addition to tax under Va. Code Section 58.1-504.

What you need

• Nothing to set up. Virginia Tax eForm PTET-PMT takes payments without an account.
• The business's FEIN and 3-digit Virginia account suffix (most businesses use 001).
• Bank routing and account numbers.
• The name, title, and phone number of the person authorizing the payment.

Start at Virginia Tax eForm PTET-PMT, Virginia's official site.

1. Open eForm PTET-PMT from the Virginia Tax eForms page (tax.virginia.gov/eforms). No login is needed.
2. Select the type of payment: Return Payment, Estimated Payment, or Extension Payment.
3. Mark Calendar as the filing basis, then enter the FEIN, the 3-digit account suffix, the entity type, and the entity's name and address.
4. For an estimated payment, select the voucher number (1 to 4) and enter the estimated tax for the year and the amount of this payment.
5. Enter the bank routing and account numbers and the payment date, then sign and confirm. An ACH credit initiated through the business's bank is the other accepted method; all payments must be electronic.

Filing the return: Form 502PTET (filed instead of Form 502), electronically only, due April 15, 2027 for a calendar-year 2026 entity. The automatic extension to file runs to October 15, 2027 (or 30 days after the federal extended due date, if later), but the tax is still due April 15, 2027.

Claiming the credit

Each eligible owner claims a refundable credit for their share of the tax on their Virginia individual or fiduciary return, after adding back any deduction for the PTET. The entity reports each owner's credit on Schedule VK-1, line 10 (PTET Credit). The Department does not allow the credit until Form 502PTET and all schedules are filed.

Good to know

• An electing entity cannot file Form 765, the Unified Nonresident Individual Income Tax Return (composite return); composite payments already made can be refunded or transferred.
• An electing entity with nonresident corporate owners still owes withholding for them, reported on Form 502PTET, Line 7(b), along with the 5.75% tax.
• If the entity fails to file within the extension period, it cannot file Form 502PTET unless it made 2026 estimated or extension payments.
• Separately stated deductions with federal limits (for example, charitable contributions and Section 179) are limited to what a C corporation could deduct.
• Penalties and interest follow the corporate income tax rules rather than the pass-through entity rules.
• Paying your personal Virginia estimates? See how to pay Virginia estimated taxes.
• Business in more than one state? Each state has a guide of its own.

Official sources

Checked October 2026 against the Virginia Department of Taxation's own publications and Va. Code Section 58.1-390.3.

• Va. Code Section 58.1-390.3 (current, history includes 2026 c. 7)
• 2025 Form 502PTET Instruction Package (Rev. 08/26)
• 2025 Form 502 Instructions (What's New: PTET sunset date removed)
• Virginia Tax news: Virginia Elective Pass-Through Entity Tax
• Virginia Tax eForms page (PTET-PMT: 502PTET Return Payment, Estimated Payment or Extension Payment)
• Virginia Tax eForm PTET-PMT

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.