Maine PTET: What businesses should know
- Maine’s PTET allows partnerships and S corporations to pay tax at the entity level.
- The election can unlock federal tax savings by bypassing the SALT deduction limit.
- Maine residents with multistate businesses now have an incentive to participate in other states’ PTET credits, which they have not been able to benefit from in the past.
Maine has enacted a Pass‑through entity tax (PTET), creating a meaningful federal tax savings opportunity for many Maine businesses. Effective January 1, 2026, the new law allows eligible entities to elect to pay Maine income tax at the entity level rather than at the owner level.
This change reflects several years of collaboration among legislators, Maine Revenue Services and practitioners. As a partner at Wipfli Advisory and a board member of the Maine Society of CPAs, I played a direct role in advancing the legislation, including providing input into the bill, testimony and legislative work sessions. Olga Goldberg, attorney at Pierce Atwood, worked closely as the lead legal voice on the bill, with the joint CPA legal effort helping shape the law.
Here’s what businesses need to know about the Maine PTET opportunity:
Who can benefit from PTET?
The law would allow the following entities to elect to pay Maine income tax at the entity level rather than the owner level:
- Partnerships and S corporations
- LLCs taxed as partnerships or S corporations
The election applies to owners that are individuals, trusts, estates and certain disregarded entities owned by individuals, trusts or estates.
What are the benefits of PTET?
Under current federal law, many business owners are limited in their ability to deduct state taxes. The PTET election addresses this by shifting the tax payment to the business, making it fully deductible for federal tax purposes.
Here’s how it works at a high level:
- The business pays Maine tax at the top individual rate (7.15%). (The 2% surtax on individuals making over $1M is excluded from this.)
- Owners receive a 90% credit on their Maine personal return for the tax paid by the entity.
- The remaining 10% Maine tax is still owed, but in most cases, the federal tax savings more than offset this amount.
For example, if you previously paid $100,000 of Maine tax related to income from a pass‑through business, that $100,000 could now be deductible for federal tax purposes with this election. This could translate into roughly $30,000 of federal tax savings, as Maine would still collect $10,000 (the 10% not covered by the 90% credit).
The net benefit of PTET would be approximately $20,000 in overall tax savings.
Big additional win for Maine residents
The law also fixes a long‑standing issue for Maine residents with multistate businesses. Historically, if a Maine resident elected into another state’s PTET, Maine did not allow a credit, which would effectively tax that income again.
Under the PTET law, Maine would allow a credit for PTET taxes paid to other states, eliminating that double taxation and creating additional savings for Maine-based owners with out-of-state operations.
How Wipfli can help
Wipfli’s direct involvement with this legislation means we’re uniquely positioned to help you incorporate PTET into your tax strategy. If you’d like to understand whether this election could benefit your business, or how it may interact with other state PTET elections you’ve already made, reach out to our state and local tax team.
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