PTE: Pass-through Entity Tax (2025)
Minnesota · Minnesota DOR · Used for tax years 2025
Minnesota’s 2025 Schedule PTE is used to elect and calculate pass-through entity income tax paid on behalf of qualifying owners. It also reports how the PTE tax credit is distributed among qualifying partners, members, or shareholders and is filed with Form M3 or M8.
Who files this form
Complete Schedule PTE if your partnership or S corporation elects to pay Minnesota income tax at the entity level on behalf of its owners. This includes LLCs taxed as partnerships or S corporations.
- The entity must have at least one qualifying owner.
- The election must be made by qualifying owners who collectively own more than 50% of the portion of the entity owned by qualifying owners.
- A single-member LLC that is not taxed as an S corporation is not eligible.
Once made, the election binds all qualifying owners.
What you'll need
Have these forms and details available, as applicable:
- Entity information: name, FEIN, Minnesota Tax ID Number, and entity type.
- Form M3 or M8: Schedule PTE is filed with the entity’s return.
- Form M3A or M8A: line 5, column C supplies the Minnesota apportionment factor.
- Owner tax schedules: federal Schedules K-1, Minnesota Schedules KPI or KS, and Schedules KPINC or KSNC for applicable federal tax adjustments.
- Schedule PTE-RP: line 14 supplies the amount entered on Schedule PTE, line 30.
- Owner details: names, Social Security Numbers or other Tax Identification Numbers, Minnesota residency, filing-requirement status, share of income, and share of taxes paid.
- Prior bonus depreciation information: amounts and filing history needed for the delayed bonus depreciation calculations.
If guaranteed payments or special allocations are included in the partnership’s PTE tax calculation, include a statement explaining how the affected partner’s share of taxes paid was determined.
How to file
Make the election by completing Schedule PTE and filing it with Form M3 or Form M8.
- Complete Part 1 to calculate the entity’s PTE tax for qualifying owners.
- Enter the total from Schedule PTE, line 31 on Form M3, line 2 or Form M8, line 3.
- Complete Part 2 to show the credit distribution for all qualifying owners, including partners included on Schedule PTE-RP.
- If there are more than 10 owners, attach additional Parts 2 for the remaining owners.
- Report each owner’s share of PTE tax on line 33 of their Schedule KPI or KS.
The supplied text does not provide a mailing address or e-file instructions.
Common mistakes
- Including excluded owners: Do not include amounts attributable to owners who are exempt from income tax or are not qualifying owners.
- Treating resident shareholders differently on Schedule KS: Complete all lines of Schedule KS for all shareholders as if they were nonresidents.
- Including resident partners on line 17: Partnerships must not include amounts attributable to resident partners on this line.
- Omitting qualifying owners from Part 2: Include all qualifying owners, including partners included on Schedule PTE-RP.
- Using inconsistent owner information: Names and identification numbers in Part 2 must match Schedule KPI or KS.
- Missing the filing-requirement checkbox: Check the box next to line 33 of Schedule KPI or KS for owners whose Minnesota filing requirement is fulfilled by Schedule PTE.
- Entering a negative tax on line 29: After the specified credit reductions, do not enter less than $0.
Questions people ask
Can the entity revoke its PTE election?
The election cannot be revoked after the original due date of the entity’s return.
Does Schedule PTE replace a Minnesota resident owner’s individual return?
No. Partners and shareholders who were Minnesota residents at any time during the tax year cannot have the entity-level tax fulfill their Minnesota income tax filing requirement. They must file Form M1 if they are required to file a federal income tax return.
How do owners claim credit for the tax paid on their behalf?
Partners and shareholders may claim a refundable credit equal to the PTE tax the entity paid on their behalf. Report the credit on Schedule M1REF or Form M2, as applicable.
Where do guaranteed payments go?
Include the Minnesota portion of guaranteed payments on line 8. In Part 2, include the payments in the recipient partner’s share of income and the related tax in that partner’s share of taxes paid. Include a statement explaining how the share of taxes paid was determined.