How to Make a New Jersey PTET (BAIT) Election: Form PTE-100 and the March 15 Deadline (2026)

A New Jersey design-studio owner emails me in late February asking whether her S-corp should pay the BAIT for the prior year. She has $500,000 of distributive proceeds, a home in Bergen County with property taxes that already swallow most of her federal SALT deduction, and a 35% federal marginal rate. The election is still open, but barely. The deadline is the original due date of the entity return, not the extended one, and that is weeks away, not months. The owner here is theoretical, but the squeeze is exactly what New Jersey's pass-through entity tax creates every winter.

What the BAIT is, in one paragraph

The Pass-Through Business Alternative Income Tax, enacted by N.J.S.A. 54A:12-1 et seq., lets a partnership or S-corp pay New Jersey income tax at the entity level on its members' distributive proceeds. The entity deducts that payment as a business expense on its federal Form 1065 or 1120-S, which lowers the income that flows through on each K-1. Under IRS Notice 2020-75, that entity-level deduction is not subject to the IRC §164(b)(6) SALT cap that limits the individual deduction. The member then claims a refundable New Jersey credit for the tax the entity already paid, so the state side roughly nets to zero and the federal deduction is the prize.

The 2026 rate schedule

New Jersey taxes the sum of the members' distributive proceeds on a three-tier schedule. It is 5.675% on the first $250,000, then $14,187.50 plus 6.52% of the amount over $250,000 up to $1,000,000, then $63,087.50 plus 10.9% of the amount over $1,000,000. The 10.9% top rate matches New Jersey's highest individual gross income tax rate and is among the steepest pass-through entity tax rates in the country. The 2021 amendments under P.L. 2021, c. 419 collapsed the old four-bracket structure and, more usefully, fixed the way distributive proceeds are measured so resident owners are taxed on all of their income while nonresidents are taxed only on the New Jersey-source slice.

When the election is due

The election is made annually, on or before the original due date of the entity's PTE-100 return, which is the 15th day of the third month after the close of the tax year. For a calendar-year S-corp or partnership that is March 15. The election cannot be made on extension. If you push the return to October with a PTE-200-T, the election itself still had to be in by the original March deadline. When the 15th lands on a weekend the date rolls to the next business day, which is why the 2025 election was effectively due March 16, 2026. This is the single most common BAIT mistake I see. Owners assume the October extension buys them time to decide, then learn in the fall that the window closed in the spring.

How to make the election step by step

The election and the filings all run through the New Jersey Division of Taxation's Pass-Through Business Alternative Income Tax system. First, register the entity for PTE access if it is not already set up. Second, submit the election electronically by the original return due date. The election is for that tax year only and is irrevocable once the year's return is filed, so it is not a set-it-and-forget-it choice. Third, fund the tax through quarterly estimated payments on Form PTE-150, due the 15th day of the fourth, sixth, and ninth months of the tax year and the 15th day of the first month after the close of the year. For a calendar-year filer that is April 15, June 15, September 15, and January 15. Underpaying the estimates exposes the entity to interest, so the cash has to move during the year, not just at filing. Fourth, file the PTE-100 return, which reconciles the tax and produces a Schedule PTE-K-1 for each member showing their share of the tax paid.

How members claim the credit

Each member receives a Schedule PTE-K-1 showing their share of the tax the entity paid, and they claim it as a refundable credit on their New Jersey return. Because the credit is refundable, if it exceeds the member's own New Jersey tax the excess comes back as a refund rather than being lost. The state side is close to a wash, and the real benefit is the federal deduction the entity captured. Corporate members claim their share on the Corporation Business Tax return instead of the NJ-1040. One thing to watch is that the BAIT credit covers only the pass-through income. Owners with wages, investment income, or other New Jersey income still budget for that separately, often through NJ-1040-ES.

Who can elect, and who cannot

Any partnership, multi-member LLC taxed as a partnership, or S-corp with at least one member who is an individual, estate, or trust subject to the New Jersey Gross Income Tax can elect. A single-member LLC that is a disregarded entity cannot elect on its own. Its owner would first have to elect S-corp status with Form 2553 to open the door to the BAIT, and that election has its own timing rules covered in our S-Corp election deadline guide. Tiered partnerships and trusts need careful mapping, because the credit ultimately has to land on a taxpayer who actually owes New Jersey tax.

Is the BAIT still worth it after OBBBA?

The One Big Beautiful Bill Act raised the federal SALT cap to $40,400 for 2026, with a phasedown that begins at $505,000 of modified AGI and pulls the highest earners back toward the old $10,000 limit. For a New Jersey owner with modest income and a smaller property tax bill, the expanded cap might absorb their state and local taxes without any workaround, and the BAIT becomes a wash with extra paperwork. For the many New Jersey owners who blow through $40,400 on property tax alone, or who sit above the phaseout, the BAIT still moves nondeductible state tax onto the federal return at full value. The workaround itself was untouched by OBBBA. For the owners I work with in high-property-tax counties, the math usually still favors electing, as long as the March deadline gets respected. Run your own numbers in the EntityIQ S-Corp tax calculator, and if you also have income in another state, pair this with our broader PTET deduction overview and the Utah PTET election guide for a sense of how the rules differ by state.

This article is educational and is not legal or tax advice. The owner described is theoretical, and the figures are 2026 estimates rounded for illustration. Please consult a New Jersey CPA or EA before making the election.