Virginia & New Mexico Enact Pass-Through Entity Elections

Thoughtware Alert Published: Mar 25, 2022
Gavel laying on a tax form with a calculator to the side

In March 2022, both Virginia and New Mexico passed pass-through entity elections (PTE). A summary of the two laws can be found below. 

Virginia (Va. Stat. 58.1-332, 58.1-390.1, 58.1-390.2, 58.1-390.3)

  • Election date is effective January 1, 2021
    • For 2021 tax returns, information on how to make the election is still forthcoming from the Department of Revenue (Department)
    • For 2022 tax returns, the election can be made on a timely filed return
  • The tax rate is 5.75 percent
  • The 2021 election due date for filing will be no earlier than one year after the extended due date for filing the return. More information will be provided when the Department makes it available. Due to the recency of the election, no interest will accrue on under or overpayments made solely attributable to the 2021 election 
  • The 2022 election due date is the due date of the return, including any extensions that have been granted
  • The election may be made annually  
  • There is no member/shareholder opt out 
  • Information on estimated payments is coming
  • There is a subtraction for residents who paid taxes under the PTE and a resident credit for taxes paid to other states available for all types of residents    

New Mexico (House Bill 102)

  • Election date is effective January 1, 2022
  • The tax rate will be the higher of the minimum tax rate imposed on individuals (1.7 percent to 5.9 percent) or the minimum tax rate imposed on corporations (4.8 percent to 5.9 percent)
  • The election can be made on the entity-level tax return filed with the Department of Revenue
  • The return must be filed no later than the original or extended due date of the entity’s federal partnership or S corporation return for the taxable year 
  • The election may be made annually 
  • Estimated payments are due at the same time and in the same amounts as the withholding required in NMSA 1978 7-3A-3(B). Currently, they are due before the 25th day of the month following the end of the calendar quarter where the taxes were required to be withheld. Estimated payments can be made on Form RPD-41359
  • There is no member/shareholder opt out
  • There is not a resident credit for taxes paid to other states   

Please contact your advisor or submit the Contact Us form below if you think this recent law change applies to your situation.

Related Thoughtware

Kate & Ben — How can we help you? Contact Us!

How can we help you?