Walter Calvert, Matt Carruth, and Liz Stieff published “2025 and 2026 Legislative Changes to Maryland’s Pass-Through Entity Tax Regime: The Problem and the Solution” in the spring 2026 edition of the Maryland State Bar Association’s Tax Talk newsletter. The following is an excerpt:
Since its inception, Maryland’s pass-through entity tax (“PTET”) has been payable only with respect to Maryland source income generated by a pass-through entity (a “PTE”). This resulted in some Maryland resident owners losing out on much of the benefit of the PTET—to the extent that the PTE’s apportionment factor attributed taxable income to other states, Maryland PTET was not payable by the PTE; however, a Maryland resident shareholder was required to include its share of such income on its Maryland resident tax return.
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