Form IT-653 Instructions: Pass-Through Entity Tax Credit (Tax Year 2025)

Form IT-653 is how partners, members, and shareholders claim a credit against their New York personal income tax based on the Pass-Through Entity Tax (PTET) already paid by their partnership or S corporation. If you’re an individual who received a share of PTET paid by a business you have an ownership stake in, this form is what lets you translate that payment into a dollar-for-dollar credit on your own state return. The IT653I document from the New York State Department of Taxation and Finance walks you through exactly how to complete it correctly for the 2025 tax year.

The Pass-Through Entity Tax itself is an elective tax that partnerships and S corporations can choose to pay at the entity level, largely as a workaround to the federal cap on state and local tax deductions. When the business pays this tax, each partner, member, or shareholder gets credited for their proportional share. But that credit doesn’t just appear automatically on your personal return — you have to claim it using Form IT-653, and the instructions in IT653I explain how the entity reports your share to you and how you transfer that information onto your own filing.

Who Needs to File This Form

You need Form IT-653 if you’re an individual taxpayer who is a partner in a partnership, a member of an LLC taxed as a partnership, or a shareholder in an S corporation, and that entity made a PTET election and paid the tax for 2025. The entity will issue you documentation showing your allocated share of the PTET credit, similar to how a K-1 works for other pass-through items. Once you have that figure, IT-653 is the vehicle for claiming it against your New York State income tax liability.

It’s worth noting this form is strictly for individuals receiving the credit through a pass-through entity — it’s not something a business files on its own behalf. The entity itself handles its PTET payment through separate filings; IT-653 is exclusively about the individual owner’s side of the transaction.

When You’ll Use It

You’ll use Form IT-653 when preparing your annual New York State personal income tax return for tax year 2025, assuming you received a PTET credit allocation from a partnership or S corporation during that year. The credit reduces your state tax liability, and in some cases it can result in a refund if the credit exceeds what you owe. Timing matters here — you need your allocation information from the entity before you can complete this form accurately, so make sure you’ve received that documentation before you sit down to file.

This credit works alongside other New York credits you might be claiming in the same filing. If you’re also dealing with business-related tax credits, it helps to understand the broader landscape of what’s available. For instance, entities investing in workforce inclusion might also be looking at the Workers with Disabilities Tax Credit, while agricultural businesses making charitable contributions could benefit from the Farm Donations to Food Pantries Credit. Production companies operating in New York City have their own specialized credit covered under the Musical and Theatrical Production Tax Credit instructions.

How to Get and Complete the Form

Form IT-653 and its accompanying instructions are available directly from the New York State Department of Taxation and Finance website as a PDF. This is a paper-only form — there’s no digital fill-in version, so you’ll need to print it out and complete it by hand using the figures provided by your pass-through entity.

Before filling it out, gather your entity’s PTET credit allocation statement, which should show your proportional share of the tax paid. The instructions walk through each line, including how to calculate your credit amount and where to enter it on your main personal income tax return. Double-check that the numbers match what the entity reported to avoid processing delays, and keep a copy of both the form and your supporting documentation with your tax records in case the state requests verification later.