Key Takeaways
- Learn how Georgia’s Pass-Through Entity Tax (PTET) allows eligible businesses to bypass the federal $10,000 SALT deduction.
- Understand who qualifies for Georgia’s PTET, how the election process works, and what factors to consider before opting in for the 2025 tax year.
- Discover how electing PTET strategically can reduce your overall tax burden, simplify compliance for multi-owner entities, and create more control over cash flow planning.
Has the federal cap on state and local tax (SALT) deductions limited your annual tax write-offs? Pass-Through Entity Tax (PTET) may be the workaround to help you legally reclaim some of those deductions.
Introduced after the 2017 Tax Cuts and Jobs Act imposed the cap, Georgia’s PTET changed who pays the state income tax. Instead of each owner paying individually, the business pays it on behalf of its owners. This allows the business to deduct those payments on its federal return, reducing taxable income and creating a win for both the business and its owners.
Caught your attention? In this article, we break down the latest on Georgia’s PTET, including who can benefit, what’s changed, and how to take advantage of the election to reduce your total tax burden. Understanding how Georgia’s PTET works and how to use it to your advantage, can help you approach 2025 with greater confidence and fewer tax surprises.
How the Georgia PTET Election Works
Georgia’s PTET is optional and must be elected each year. You can make the election if your business operates as a partnership, S corporation, or LLC taxed as either.
To qualify, your business must:
- Have at least one individual owner, and
- Be doing business in Georgia or earning Georgia-sourced income.
For tax years beginning on or after January 1, 2023, all partnerships are eligible to make the election, regardless of ownership structure. However, sole proprietorships and single-member LLCs don’t qualify because they aren’t treated as separate pass-through entities for tax purposes.
Who Should Consider Electing PTET
For 2025, Georgia’s PTET rate aligns with the state’s flat 5.19% income tax rate – the same rate that applies to individuals. The election could be a smart move for your business if you:
- Generate significant taxable income passed through to individual owners;
- Have owners who itemize deductions and are affected by the federal $10,000 SALT deduction cap;
- Operate in multiple states, where PTET can help streamline or offset multi-state tax exposure;
- Expect steady or high profits, where entity-level deductions can meaningfully lower your overall tax liability.
If your income is modest or you typically take the standard deduction, the potential savings may be smaller, but it’s still worth reviewing your numbers with a CPA who understands both federal and multi-state implications.
Making the Election
You make the election when filing your Georgia return using Form 700 for partnerships or Form 600S for S corporations. Once you make the election, it’s locked in for that tax year, so plan carefully before filing. You’ll also need to make estimated payments on the C corporation schedule, using Form 602-ES or via the Georgia Tax Center.
Access our free guide to your Entity Selection Cheat Sheet.
Advantages of Electing Georgia’s PTET
Georgia’s PTET doesn’t just help lower your tax bill, it also brings structure and efficiency to how your business manages state taxes in the following ways:
- Simplified Compliance in Georgia: Paying state income tax at the entity level means one filing, one payment schedule, and less owner-level administration. This is especially helpful for multi-owner businesses.
- Strategic Cash-Flow Planning: Making payments through the business gives you more flexibility to time deductions and manage quarterly estimates effectively.
- Reduced Owner Complexity: Each owner receives income after Georgia tax has been applied, simplifying individual reporting and reducing filing friction.
- Potential Tax Savings: When structured properly, PTET can reduce both federal and state tax exposure, particularly for high-income or multi-state businesses.
Limitations to Watch For When Electing Georgia’s PTET
While Georgia’s PTET offers meaningful advantages, it’s not the right fit for every business. Here are a few factors to consider before making the election:
- Irrevocable for the Year: Once you elect PTET on your Georgia return, the choice can’t be changed for that tax year, so it’s important to confirm the numbers before filing.
- Limited Benefit for Some Owners: If you typically take the standard deduction or have lower pass-through income, the PTET may not generate substantial savings.
- Multi-state Coordination: If your business operates in more than one state, PTET elections and credits may not align perfectly. You’ll need a coordinated tax strategy to avoid double taxation or missed deductions.
- No Personal Credit for Georgia Taxes Paid: Owners can’t claim a personal credit for Georgia taxes paid at the entity level, since the business already takes that deduction on its federal return.
How Fusion CPA Can Help You Navigate Georgia’s PTET
Electing PTET isn’t just about meeting eligibility requirements; it’s also about understanding how the election impacts your broader tax strategy. At Fusion CPA, we help Georgia businesses model potential savings, manage the election process, and integrate PTET planning into their overall financial goals.
Our services include:
- PTET election and filing assistance
- Multi-state and cross-border tax planning
- Entity structuring and tax strategy alignment
Ready to see how Georgia’s PTET could reduce your 2025 tax burden? Schedule a discovery call with one of our expert CPAs today.
Frequently Asked Questions
1. What is Georgia’s Pass-Through Entity Tax (PTET)?
Georgia’s PTET allows eligible pass-through entities (such as partnerships, S corporations, and LLCs taxed as either) to pay state income tax at the entity level instead of passing it through to individual owners. This structure lets the business deduct those payments on its federal return, helping owners reduce their overall federal tax burden.
2. How do I make the PTET election in Georgia?
You can elect PTET when filing your Georgia state return using Form 700 (for partnerships) or Form 600S (for S corporations). The election must be made by the original or extended due date and is irrevocable for that tax year. Estimated payments follow the C corporation schedule using Form 602-ES or the Georgia Tax Center.
3. Who benefits most from Georgia’s PTET?
PTET generally benefits businesses with significant taxable income passed through to individual owners, especially those affected by the federal SALT deduction cap. It can also help multistate businesses streamline their tax reporting and improve cash flow management. However, it’s less advantageous for owners who take the standard deduction or have minimal pass-through income.
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This blog article is not intended to be the rendering of legal, accounting, tax advice, or other professional services. We base articles on current or proposed tax rules at the time of writing and do not update older posts for tax rule changes. We expressly disclaim all liability regarding actions taken or not taken based on the contents of this blog as well as the use or interpretation of this information. Information provided on this website is not all-inclusive and such information should not be relied upon as being all-inclusive