Publication 4 – Montana Pass-Through Entity Tax (PTET) Guide

Publication 4 provides guidance to partnerships and S corporations that elect to pay the Montana pass-through entity tax (PTET), an elective tax introduced by Senate Bill 554 (2023). This elective tax allows the pass-through entity to pay income tax at the entity level on behalf of affected owners. The affected owners may claim the tax as a refundable credit on their income tax return. The tax can be paid in lieu of certain nonresidents having to file a Montana income tax return.

The guide explains eligibility, election procedures, and calculation methods. Affected owners include individuals, estates, trusts, and certain disregarded entities. The PTET is calculated based on Montana source income (MTSI) and applies only to affected owners. Entities can make a resident election to include 100% of income for Montana residents, even if not all income is Montana-sourced.

The document outlines payment methods, including estimated and flow-through payments, and details how to report PTET on Form PTE and on affected owners’ tax returns. It also covers credits, penalties, interest, and special scenarios like entities not doing business in Montana.

This guide is intended for accountants, business owners, and tax professionals working with Montana-based pass-through entities.

Download Publication 4 (PDF, 1.2 MB)