California's pass-through entity (PTE) elective tax allows qualified partnerships and S corporations to pay tax at the entity level on qualified net income, providing a corresponding credit to consenting qualified taxpayers. For taxable years beginning in 2026, Senate Bill 132 extends the PTE elective tax and credit through 2030 and modifies rules regarding the required June 15 payment. This publication reflects tax law and regulations applicable as of May 2026 and is subject to change without notice.
This article examines the June 15, 2026 initial payment requirements for the California PTE elective tax, the modifications to election validity and credit calculations under SB 132, payment methods, and key distinctions from other tax obligations.
June 15, 2026 Initial Payment Requirement
For taxable years beginning on or after January 1, 2026, qualified entities making the PTE elective tax election must make an initial payment by June 15 of the taxable year. The required amount is the greater of $1,000 or 50 percent of the PTE elective tax paid for the prior taxable year. This initial payment is separate from any other estimated tax payments or tax liabilities of the entity or its owners.
SB 132 Modifications to PTE Elective Tax Rules
Senate Bill 132 extends the availability of the PTE elective tax and corresponding credit for taxable years beginning on or after January 1, 2026, and before January 1, 2031. Under prior rules, failure to make the full required June 15 payment would invalidate the election for that year.
For 2026 and subsequent years within the extension period, SB 132 provides that a qualified entity may still make a valid PTE elective tax election even if the June 15 payment is not made or is less than the required amount. However, the PTE elective tax credit available to qualified taxpayers is reduced by 12.5 percent of each qualified taxpayer's pro rata share of the unpaid amount due on June 15. The election is made by filing Form FTB 3804 (accessed May 25, 2026) with the entity's timely filed original return.
Qualified entities that do not make the required initial payment in full by June 15, 2026, may still make the PTE elective tax election under SB 132. The credit allowed to qualified taxpayers will be reduced by 12.5 percent of their pro rata share of the amount due but not paid by the June 15 deadline.
Payment Methods and Procedures
PTE elective tax payments must be made using either the FTB's Web Pay application, designating the payment specifically as a PTE elective tax payment, or by completing and mailing Form FTB 3893, Pass-Through Entity Elective Tax Payment Voucher (accessed May 25, 2026). These payments cannot be combined with payments for other taxes or liabilities. The balance of the PTE elective tax is due on or before the due date of the entity's original tax return, without regard to any extension of time to file.
Compliance Resources and Tools
Official FTB forms and instructions, including Form 3804 and Form 3893 (both accessed May 25, 2026), are available on the Franchise Tax Board website.
- Qualified California pass-through entities must make an initial PTE elective tax payment by June 15, 2026, in the greater of $1,000 or 50% of the prior year's PTE tax.
- SB 132 extends the PTE elective tax and credit through tax years beginning before January 1, 2031.
- Failure to make the full June 15 payment no longer invalidates the election but results in a 12.5% credit reduction for the shortfall.
- PTE elective tax payments must be made separately using Web Pay or Form FTB 3893.
- The PTE election is made on Form FTB 3804 with the entity's timely filed original return.
- The final payment of the PTE elective tax is due with the original due date of the entity's tax return.
References
- Franchise Tax Board. (2026). Pass-through entity (PTE) elective tax. FTB.ca.gov. Accessed May 25, 2026. https://www.ftb.ca.gov/file/business/credits/pass-through-entity-elective-tax/index.html.
- Franchise Tax Board. (2026). Help with PTE elective tax. FTB.ca.gov. Accessed May 25, 2026. https://www.ftb.ca.gov/file/business/credits/pass-through-entity-elective-tax/help.html.
- Franchise Tax Board. (2026). 2026 Instructions for Form FTB 3893. FTB.ca.gov. Accessed May 25, 2026. https://www.ftb.ca.gov/forms/2026/2026-3893-instructions.pdf.
- Franchise Tax Board. (2026). Tax News – June 15 Payment Rules. FTB.ca.gov. Accessed May 25, 2026. https://www.ftb.ca.gov/about-ftb/newsroom/tax-news/index.html.
- Franchise Tax Board. (2026). Senate Bill 132 – Extension of PTE Elective Tax. FTB.ca.gov. Accessed May 25, 2026.
The information contained in this publication is provided for educational and general informational purposes only. It does not constitute tax advice, accounting advice, legal advice, or any other form of professional advice and does not create a client-professional relationship.
The content reflects tax law and regulations applicable on the date of publication only and is subject to change without notice. Examples and illustrations are hypothetical and do not represent any specific taxpayer situation.
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