So what’s a “pass-through entity tax,” and why did it cause such a kerfuffle in Wednesday’s meeting of the House Taxes Committee? Well, by declaring themselves a “pass-through entity,” a small business pays no income tax on its own, instead having all profits and losses flow to the personal income tax returns of the owners or shareholders, where they’re taxed once at individual rates. But, to make that happen, your state must have a pass-through entity tax. Minnesota’s expired at the end of 2025.