Navigating New York's 2025 PTET Election Deadline
As the 2025 deadline for New York's Pass-Through Entity Tax (PTET) elections approaches, businesses must take the necessary steps to prepare for their tax obligations. New York is one of the few states requiring PTET elections to be made in the year before a business files tax returns. This means that all businesses opting into the New York State (NYS) and New York City (NYC) PTET regimes for 2025 must make their elections by March 15, 2025, even before knowing their taxable income for the year.
This article sets forth in detail important deadlines, requirements, potential changes to the PTET system for New York in 2025, and considerations for businesses.
NYS and NYC PTET Annual Election for 2025
To make the 2025 NYS and NYC PTET election, a business must do so through its Online Services account by March 15, 2025. The New York tax website has launched the PTET elections filing already; thus, businesses should act fast to ensure compliance. This date applies to calendar year filers and fiscal year filers. The PTET runs by calendar year for all taxpayers, so businesses must decide to opt in for the entire calendar year, regardless of their fiscal year status.
While this early election deadline does seem like a tall order, it is nevertheless an extremely important procedure for businesses looking to reap any benefits that the PTET regime grants. Moreover, the election is critical to the extent that it allows those pass-through entities (S corporations, partnerships, LLCs) to avoid double taxation by passing tax liabilities to the individual owners while obtaining a state-level deduction. However, the election must be made by businesses without knowing their taxable income-that adds an element of uncertainty to their financial planning.
PTET Filing Extensions and Due Dates
The 2025 PTET returns for both NYS and NYC are due by March 15, 2026. However, businesses electing for the PTET program can request a six-month filing extension. The extension will provide additional time to file the returns, but businesses should be aware that tax payments remain due by March 15, 2026, regardless of whether an extension is requested. Failure to meet the March 15 payment deadline will result in interest and penalties, so businesses should plan accordingly.
Quarterly PTET Estimated Payments for 2025
The first-quarter estimated payment is due by March 15, 2025, with subsequent payments due on June 15, September 15, and December 15, 2025.
Given that businesses will need to make these payments without knowing their exact taxable income for the year, proper forecasting of profits and careful financial planning are essential to avoid underpayment penalties. Estimating taxes for the PTET can be tricky, especially for businesses with fluctuating income, but staying on top of these deadlines is key to maintaining compliance and avoiding interest charges.
Potential Changes to the PTET Election Deadline in New York
While businesses must adhere to the current PTET election deadline of March 15, 2025, there have been ongoing discussions regarding the possibility of moving the NYS PTET election due date to September 15. This proposed change would give businesses more time to assess their profitability and decide if opting into the PTET regime makes sense for them.
For several reasons, however, the businesses should proceed cautiously with consideration of this potential change.
- Uncertainty: The proposed change is still being discussed and would likely be part of a state budget effective April 1, 2025, which is later than the current election deadline for the PTET.
- Retroactive Effect: Even if the election date were to be pushed back to September, companies would still have to have been making estimated payments for earlier quarters, running the risk that any such companies depending on this possible change may find themselves underpaying their taxes in earlier quarters and subsequently incurring potential penalties and interest.
Until any potential changes are confirmed, businesses should remain on track with current PTET deadlines in order to keep compliant with state and local tax requirements.
Why Timely PTET Election is Critical?
With regard to tax saving opportunities for businesses, the New York PTET allows pass-through entities to pay state-level taxes at the entity level rather than at the individual level, thus avoiding double taxation. In addition, the PTET provides some possible relief from the federal cap on state and local tax (SALT) deductions, allowing business owners to deduct more of their state taxes on their personal returns.
However, the need for all businesses to make their PTET elections with no full knowledge of their annual income highlights the importance for business owners of forecasting taxable income with great care and consulting tax professionals to ascertain if opting into the PTET is advantageous. Once the election is made this year, businesses will be locked into the program for the entire year, and correct estimation of tax payments may shield them from penalties.
Conclusion
Keeping in mind the fast approaching PTE election deadline in New York State/City for March 15, 2025, businesses must ensure they are prepared. While some potential changes to the PTET deadline may be near, businesses must display caution while properly structuring their elections under the existing rules to avoid penalties. By tracking deadlines and making timely estimated payments along with professional consultations, companies can maintain compliance with New York's PTET laws.
Staying proactive now will help businesses navigate the complexities of PTET filings and take full advantage of any tax benefits available under New York’s tax regime.
