Under Virginia law, certain pass-through entities (PTEs) can choose to pay Virginia income tax at the entity level, and the owners of the PTE can receive corresponding credits. The general effect of this is to transfer the Virginia income tax liability on the PTE’s income from the PTE’s owners to the PTE itself. Electing PTEs are taxed at a rate of 5.75%. PTEs can make this election if 100% of their owners are natural persons (S-corporations are eligible if 100% of their owners are natural persons or other persons eligible to be members of an S-corporation).

The Elective Pass-Through Entity Tax (PTET) must be filed and paid electronically. There is no waiver from this electronic filing requirement for the Elective PTET. Please find a list of approved software products here.

Owners of a PTE that chooses to pay the Elective PTET are entitled to a refundable credit on their individual and fiduciary returns equal to their portion of the amount of tax paid by the PTE. For more information, please see: