It should just lower Federal income, but it also treats the NY credit as an individual payment of state tax that is paid with the return and adds it to Sch A for the following year!  Check for yourself.  Go to a 2022 individual NY return (IT-203 is where I've seen it, NY non-resident, though I'd guess it applies to IT-201 as well) that has a PTET credit.  Open the 2023 Federal return and look at the carryover worksheet and the Schedule A line 5.  It carries the credit as an individual payment of tax, thereby not only deducting it on the partnership return (and reducing K-1 income) but also deducting it on the partner's Sch A.