Pass-through Entity Tax

No. The election is irrevocable and binding on the pass-through entity and all of its owners for the applicable tax year.

The procedure for making a PTET election will be different for tax year 2022 and for tax years 2023 and later.

Tax Year 2022

The Department has developed a 2022 PTET form that is filed online through GovConnectIowa. Pass-through entities use this 2022 PTET form to make the PTET election, compute and report the PTET due, and compute and report the PTET credit available to each owner. This is the only method to make a PTET election for tax year 2022. The Department will not be modifying any existing 2022 income forms or schedules.

It is strongly recommended that a pass-through entity logs into the GovConnectIowa account to complete their 2022 PTET form. However, there is an option to Quick File the 2022 PTET form without logging in.

The 2022 PTET form on GovConnectIowa is a supplement to the pass-through entity’s 2022 IA 1065 partnership return or 2022 IA 1120S S corporation return. The entity must file its 2022 IA 1065 or 2022 IA 1120S on or before the date it files its 2022 PTET form. In order to complete the 2022 PTET form on GovConnectIowa, the pass-through entity will need income information and other data reported on its filed 2022 IA 1065 or 2022 IA 1120S. If the electing pass-through entity is required to amend its 2022 IA 1065 or 2022 IA 1120S at a later date, the entity will also be required to amend its 2022 PTET form on GovConnectIowa.

Pass-through entities required to file a tax year 2023 short-year return before the 2023 Iowa tax forms become available are also eligible to make a 2023 PTET election using the 2022 PTET form on GovConnectIowa.

Tax Years 2023 and Later

Pass-through entities will be allowed to make a PTET election for a tax year in one of two ways: 

Make the election directly on the pass-through entity’s IA 1065 partnership return or IA 1120S S corporation return.

Submit a PTET election form prior to filing the Iowa return by logging into the pass-through entity’s partnership or S corporation account on GovConnectIowa.

This PTE election form will be made available at a later date.

This PTE election form will only record the entity’s PTET election; the electing entity’s PTET liability will be computed on the IA 1065 or IA 1120S.

Pass-through entities are encouraged to create a GovConnectIowa logon and gain access to their tax accounts. For more information on gaining access to your accounts, visit our GovConnectIowa Help page.

No, the election is voluntary. However, the election is binding on the pass-through entity and all its owners once made for the applicable tax year.  

A PTET election only applies for one tax year. A separate election must be made for each tax year. A PTET election may be made for any tax year beginning on or after January 1, 2022, but before January 1, 2026 (i.e. tax years 2022-2025). The PTET election is scheduled to expire in the same tax year that the individual limitation on the state and local tax (SALT) deduction under Internal Revenue Code section 164(b)(6) expires. If that SALT deduction limitation is extended by Congress in the future, the Iowa PTET election will automatically be extended for the same period of time.  

For tax year 2022, the PTET election must be made by the later of the following dates:

• April 30, 2024, or
• The due date for filing the 2022 IA 1065 or 2022 IA 1120S, including extensions.

For tax years 2023 and later, the PTET election must be made by the due date for filing the pass-through entity’s IA 1065 or IA 1120S income tax return, including extensions.

A business entity that is taxed as a partnership or S corporation for federal and Iowa income tax purposes and that is required to file a federal and Iowa partnership income tax return (federal form 1065 and IA 1065) or a federal and Iowa S corporation income tax return (federal form 1120-S and IA 1120S). This may include an S corporation, general partnership, Limited Liability Company (LLC), Limited Liability Partnership (LLP), or Limited Partnership (LP).

A publicly traded partnership as defined in Internal Revenue Code section 7704 is not eligible to make the PTET election. A single-member LLC or other entity treated as a disregarded entity for federal and Iowa tax purposes is not eligible to make its own PTET election.

The PTET election must be made by an authorized person from the pass-through entity. This is any individual with the authority to sign the pass-through entity’s Iowa partnership income tax return (IA 1065) or Iowa S corporation income tax return (IA 1120S) and bind the electing pass-through entity and its owners for Iowa income tax purposes.