North Carolina PTET 2026: deadline, rate, who can elect
North Carolina (NC), tax year 2026, from the same rules the connector returns. 2025 is below for comparison. Last verified October 24, 2026.
Informational. Not tax advice.
Elective PTET
Yes
The taxed pass-through entity election continues. The 2026 Form NC-40 PTE is the estimated-tax form for a taxed partnership, and G.S. 105-153.7 states the 2026 individual rate used by G.S. 105-154.1.
Who can elect
An S corporation required to file under G.S. 105-131.7, or a partnership required to file under G.S. 105-154(c), including an LLC classified as a partnership. Publicly traded partnerships described in IRC 7704(c), and partnerships with a partner outside the individual, estate, and listed-trust categories in the notice, cannot elect.
The enactment notice is still the Department's eligibility FAQ. A partnership that is not required to file cannot elect.
How the election is made
The entity elects on its timely filed annual return, including extensions. A late return is not a valid election.
The election is annual. The notice's 2022 revocation example is not generalized.
Election deadline
The timely annual return, including extensions. Without an extension, the 15th day of the fourth month after year-end.
A late return does not elect.
Rate
3.99 percent.
G.S. 105-153.7 sets the rate at 4.25 percent for 2025 and 3.99 percent for taxable years beginning after 2025. Subsection (a1) rate-reduction triggers are written to start with taxable years beginning in 2027, so they do not change the 2026 rate of 3.99 percent. G.S. 105-154.1 uses the individual rate.
Owner relief
Deduction, not a credit for the entity tax, for the owner's share of taxed-PTE income included in the entity's North Carolina taxable income and in the owner's adjusted gross income.
The notice's Question B1 is the source. The deduction is lost if the entity does not pay the full tax within 60 days after notice of the outstanding liability. Separately stated deductions and the owner adjustments in G.S. 105-153.5(c3) are outside the entity base.
Estimates
Four installments when North Carolina income tax of at least $500 after credits is reasonably expected. Generally the 15th of the fourth, sixth, ninth, and twelfth months.
The 2026 Form NC-40 PTE is the taxed-partnership estimated-tax form. A partnership that does not elect does not pay estimated income tax under this rule.
Sunset or repeal
No sunset date is stated in the notice or in G.S. 105-153.7 as reviewed.
The 2026 estimated-tax form shows the election is still administered.
Still open in the source review
- The 2026 bonus-depreciation add-back percentage and recovery schedule are not stated on the Department page, which limits its operative paragraph to tax year 2025.
- The IRC conformity date in G.S. 105-228.90 was not verified.
- IRC 179 treatment was not verified.
Sources for this year
2025
Last verified October 24, 2026.
Elective PTET
Yes
A partnership or S corporation may elect to be a taxed pass-through entity. G.S. 105-154.1 imposes the partnership tax at the individual rate in G.S. 105-153.7. The 2025 D-403 instructions confirm the election still exists. The Department's enactment notice remains its FAQ.
Who can elect
An S corporation required to file under G.S. 105-131.7, or a partnership required to file under G.S. 105-154(c), including an LLC classified as a partnership.
Not eligible: a publicly traded partnership described in IRC 7704(c), or a partnership that at any time during the year has a partner who is not an individual, an estate, a trust described in IRC 1361(c)(2), or an organization described in IRC 1361(c)(6). A partnership that is not doing business in North Carolina and is not required to file cannot elect.
How the election is made
The pass-through entity elects on its timely filed annual North Carolina return, including extensions. A late return is not a valid election. The election is annual.
The 2021 notice's examples show the election box on the return. A revocation example in that notice is limited to the 2022 fact pattern it describes and is not restated as a general revocation right.
Election deadline
The timely filed annual return, including extensions. Without an extension, the return is due the 15th day of the fourth month after year-end. April 15 for a calendar year.
A late return does not make a valid election.
Rate
4.25 percent.
G.S. 105-153.7 sets the 2025 individual rate at 4.25 percent. G.S. 105-154.1(b) imposes the taxed-partnership tax at that rate. The 2025 D-403 instructions state 4.25 percent. The rate-reduction triggers in G.S. 105-153.7(a1) are written to affect years beginning in 2027 and do not change 2025.
Owner relief
Deduction, not a credit for the entity tax. An owner may deduct the share of taxed-PTE income to the extent it was included in the taxed PTE's North Carolina taxable income and in the owner's adjusted gross income.
Question B1 of the Department's notice states that deduction and is not limited to 2022. If the PTE does not pay the full tax within 60 days after being notified of the outstanding liability, the owner is not eligible for the deduction and the Department issues a Notice of Proposed Assessment. Separately stated deductions are not in the taxed-PTE base. The owner adjustments in G.S. 105-153.5(c3) are not in the entity's taxable income.
Estimates
A taxed PTE that reasonably expects North Carolina income tax of at least $500 after credits pays four installments, generally the 15th of the fourth, sixth, ninth, and twelfth months.
Calendar dates are April 15, June 15, September 15, and December 15. A partnership that does not elect is not required to pay estimated income tax. The 2025 D-403 instructions are the source for the $500 rule.
Sunset or repeal
No sunset date is stated in the enactment notice or in the statute sections reviewed.
The 2025 instructions still describe the election.
Still open in the source review
- The IRC conformity date in G.S. 105-228.90 was not verified.
- IRC 179 treatment was not verified.
Sources for this year
Bonus-depreciation conformity is on its own page.