Division of TaxationFor ³Ô¹ÏºÚÁÏ tax purposes, income and losses of a pass-through entity are passed through to its members. Eligible S corporations, partnerships, and LLCs classified as a partnership or an S corporation for federal tax purposes with at least one member who is an individual, estate, or trust who is liable for tax on their share of distributive proceeds subject to the ³Ô¹ÏºÚÁÏ Gross Income Tax Act may elect to pay PTE/BAIT at the entity level on the sum of each member’s share of distributive proceeds.
Members can then claim a refundable tax credit on their ³Ô¹ÏºÚÁÏ Gross Income Tax or Corporation Business Tax return for their share of tax paid by the entity. Partnerships can also claim a BAIT credit against their filing fee, nonresident tax on behalf of nonresident partners, their own PTE-100, or pass it through to their partners if they are all individuals, estates, or trusts.
To participate, an entity must with the ³Ô¹ÏºÚÁÏ Division of Revenue and Enterprise Services and file an annual election. All forms, returns, and payments must be submitted electronically.
Eligible Entities:
Not Eligible:
| Entity Type | Election Eligibility | Notes |
| S Corporation | Yes | Credit flows to shareholders based on distributive proceeds that were allocated to ³Ô¹ÏºÚÁÏ |
| Partnership | Yes | Credit flows to resident individuals, estate, and trust partners on all income; Credit flows to other resident partners on NJ-source income; Credit flows to nonresident partners on NJ-source income |
| Multi-member LLC | Conditional | Eligible if LLC is classified as a partnership or an S corporation for federal tax purposes and has at least one member who is an individual, estate, or trust subject to NJ Gross Income Tax |
| Single-member LLC or sole proprietorship | No | Not eligible |
| Tax Rates | |
| Taxable Income | Tax Rate |
| $0-$250,000 | 5.675% |
| $250,001-$1,000,000 | 6.52% |
| Over $1,000,000 | 10.9% |
Sourcing Rules:
Alignment with Entity Returns:
Eligible pass-through entities must complete an annual PTE/BAIT election. All forms and payments must be filed electronically via the PTE File and Pay System. The election must be made before any payments can be accepted; this includes estimated tax payments.
Election:
Estimated Tax Payments:
Key Deadlines for Calendar Year Filers:
Note: BAIT estimated tax payments are separate from NJ-1040-ES estimated tax payments.
Filing the Return:
Composite and Nonresident Members:
Overpayments may be carried forward to the following tax year if a PTE BAIT election was made for the following tax year. If no election was made, the overpayment will be refunded.