How to Complete and File Massachusetts Form 63D-ELT: PTE Excise

Massachusetts Form 63D-ELT is the return a partnership, S corporation, or eligible trust files to pay a 5% elective excise on its qualified Massachusetts income at the entity level, which then generates a refundable credit for each qualified member on their personal return.¹ The form must be filed electronically through MassTaxConnect or approved third-party software. Paper submissions are not accepted and will not be treated as timely.²

Which Entities Qualify

Three categories of entities can make the Chapter 63D election:¹

Partnerships, including LLCs treated as partnerships federally. Publicly traded partnerships are excluded.
S corporations, including LLCs treated as S corporations federally.
Trusts, to the extent they have income flowing through to beneficiaries subject to Massachusetts personal income tax. A trust filing Form 2 qualifies if it reports income on Schedule 2K-1.

The entity needs at least one qualified member: an individual subject to Massachusetts personal income tax under Chapter 62. Corporate members and certain partnership members are not qualified members, and their share of income is excluded from the excise calculation. Sole proprietorships and single-member LLCs that are disregarded federally cannot elect at all.³

When the Election and Form Are Due

The election is made annually on the entity’s timely filed income tax return (Form 3 for partnerships, Form 355S with Schedule S for S corporations, or Form 2 for trusts) and confirmed by filing Form 63D-ELT.¹ It cannot be made on an amended return. Once made for a tax year, it is irrevocable and binds every qualified member. No one can opt out individually.

Form 63D-ELT is due on or before the entity’s return due date, including valid extensions. For calendar-year filers:

Partnerships and S corporations: March 15
Trusts filing Form 2: April 15

Fiscal-year partnerships and S corporations file by the 15th day of the third month after year-end; fiscal-year trusts, the 15th day of the fourth month. Because the election is annual, evaluate each year whether it still makes financial sense for your members.

What to Gather Before You File

Have this ready before logging into MassTaxConnect:

The entity’s federal employer identification number
Qualified income taxable in Massachusetts, meaning the distributive share attributable to qualified members only, with corporate and other non-qualified members’ shares removed
Each qualified member’s name, Social Security number, and ownership percentage
The distributive share allocation to each partner, shareholder, or beneficiary
Total estimated PTE excise payments already made during the year

The excise is a flat 5% of qualified Massachusetts income.² Figures on the form must reconcile with the entity’s federal return. If income is sourced to other states, only the Massachusetts-taxable portion goes into the calculation.

Estimated Payments During the Year

If your PTE excise for the year will be $400 or more, you must make quarterly estimated payments, even though the formal Chapter 63D election itself cannot be made until the return is filed.¹ First-time filers sometimes miss this: you pay in throughout the year for an election you won’t officially confirm until the following March or April.

For calendar-year filers, estimated payments are due April 15, June 15, September 15, and January 15. The required amount is the lesser of:

80% of the PTE excise ultimately owed on the current year’s Form 63D-ELT, or
100% of the excise shown on the prior year’s Form 63D-ELT, if the entity elected and filed for a full 12-month prior year¹

Underpayment triggers a penalty computed on Form M-2210, which must be enclosed with the Form 63D-ELT filing.²

Filing and Paying Through MassTaxConnect

Log in to MassTaxConnect, go to the PTE excise section, enter member-level details and income allocations, and submit. A digital signature certifies the return.² Payment must also be electronic. The balance owed after crediting estimated payments is due on the entity’s original return date (March 15 or April 15 for calendar-year filers). An extension buys time to submit the return, not to pay the tax. Save the confirmation number the system generates.

To correct a filed return, submit an amended Form 63D-ELT electronically, mark the “Amended return” oval, and attach a statement explaining the reason.² An amended return can correct an existing election but cannot create one that was never made.

Penalties, Interest, and the Six-Month Rule

Late filing and late payment each carry a penalty of 1% of the tax due per month or partial month, capped at 25%.² Interest runs on unpaid tax from the original due date. The two penalties apply independently, so a return that is both filed late and paid late can attract both.

One important cushion: missing the payment deadline does not automatically void the election. As long as the return is filed within six months of the original due date, the Chapter 63D election stands.¹ Interest and penalties still accrue, but members keep their credit. Miss that six-month window, and the election was never properly made.

How Members Claim the Credit

Each qualified member receives a credit equal to 90% of their distributive share of the PTE excise the entity paid.² The entity reports each member’s share on:

Schedule SK-1 for S corporation shareholders⁴
Schedule 3K-1 for partners⁵
Schedule 2K-1 for trust beneficiaries¹

Members claim the credit on Form 1 (residents) or Form 1-NR/PY (nonresidents and part-year residents). Nonresident qualified members must file a Massachusetts personal return, or participate in a composite return, to claim it.³ The credit is fully refundable, so any excess over a member’s Massachusetts tax is refunded as an overpayment.⁶

Is the Election Worth Making

The point of the excise is federal. When the entity pays state tax, the payment is deductible in computing its federal taxable income and is not subject to the individual SALT cap. IRS Notice 2020-75 confirmed this treatment.⁷ The deduction reaches members as reduced ordinary income on their federal Schedule K-1 rather than as a separately stated state tax deduction that would count against their personal SALT limit.

For 2026, the federal SALT cap rises to $40,400 for most filers, with a phase-out starting at $505,000 of modified adjusted gross income. That higher cap reduces the urgency for some taxpayers. For members with significant Massachusetts income, especially those past the phase-out where the cap contracts back toward $10,000, the entity-level deduction through Form 63D-ELT still produces meaningful federal savings. The legislation that raised the SALT cap explicitly preserved deductibility of entity-level PTE taxes.

Do the math before electing. Members pay 5% at the entity level but recover only 4.5% as a personal credit, a 0.5% gap that is worth it only when the federal deduction savings exceed it. Entities dominated by high-earning members already pinned by the SALT cap generally come out ahead. Entities whose members wouldn’t hit the cap anyway lose 10% of the excise for nothing.

1
Massachusetts Department of Revenue. Elective Pass-through Entity Excise
2
Massachusetts Department of Revenue. 2025 Form 63D-ELT Instructions
3
Massachusetts Department of Revenue. TIR 22-6 – Pass-through Entity Excise
4
Massachusetts Department of Revenue. S Corporations
5
Massachusetts Department of Revenue. Partnerships
6
Massachusetts Department of Revenue. 2024 Massachusetts Form 63D-ELT Instructions
7
Internal Revenue Service. Notice 2020-75