PTETaxDesk / 2026 State PTET & $40k SALT Guides / Massachusetts Chapter 63D PTET 90% Credit Rule (2026): When the 10% Haircut Still Saves Tax
Massachusetts Chapter 63D PTET 90% Credit Rule (2026): When the 10% Haircut Still Saves Tax
Massachusetts Chapter 63D PTET 90% Credit Rule (2026)?
Because Massachusetts grants pass-through owners only a 90% refundable credit for the 5.0% entity-level tax (a 0.50% state haircut), electing MA PTET in 2026 is profitable when the federal tax savings (5.0% x 32%-37% = 1.60%-1.85%) exceed the 0.50% state credit loss and personal SALT is already capped.
Because Massachusetts grants pass-through owners only a 90% refundable credit for the 5.0% entity-level tax (a 0.50% state haircut), electing MA PTET in 2026 is profitable when the federal tax savings (5.0% x 32%-37% = 1.60%-1.85%) exceed the 0.50% state credit loss and personal SALT is already capped.
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2026 PTET & SALT Compliance Checklist
- Adopt a Written Partner/Shareholder PTET Consent Resolution: Keep signed authorization in your corporate or partnership minute book.
- Remit Cash-Basis Vouchers Before December 31, 2026: Under IRS Notice 2020-75, cash-basis entities can deduct 2026 PTET only to the extent paid by December 31, 2026.
- Avoid Overpayment Refunds (IRC § 111): Base your Q4 PTET payment on actual projected 2026 state liability so next year's state refund isn't recaptured as ordinary federal income.
Frequently Asked Questions
Massachusetts Chapter 63D PTET 90% Credit Rule (2026)?
Because Massachusetts grants pass-through owners only a 90% refundable credit for the 5.0% entity-level tax (a 0.50% state haircut), electing MA PTET in 2026 is profitable when the federal tax savings (5.0% x 32%-37% = 1.60%-1.85%) exceed the 0.50% state credit loss and personal SALT is already capped.