Ohio enacted H.B. 33 on July 4, 2023, which made changes to Ohio’s Commercial Activity Tax (CAT). Businesses subject to Ohio CAT should be aware of the updated CAT rules, including the elimination of the annual minimum tax and increases to gross receipt exclusions.
What is Ohio CAT?
The CAT is an annual tax imposed on the privilege of doing business in Ohio. CAT is measured by taxable gross receipts from business activities in Ohio. The tax applies to retailers, service providers, manufacturers, and other types of businesses. Businesses subject to CAT are required to register, file returns, and make corresponding payments.
What’s changing?
Prior to 2024, businesses liable for Ohio CAT were subject to a $150 annual minimum tax (AMT), regardless of gross receipt totals. For tax periods starting on and after January 1, 2024, the AMT is eliminated. Additionally, Ohio excluded $1 million of gross receipts from CAT liability for tax years starting before January 1, 2024. This exclusion is currently scheduled to increase to $3 million in 2024 and $6 million in 2025. The CAT rate remains 0.26% for gross receipts over the exclusion amount.
Additional changes to Ohio CAT include the elimination of annual returns and adjustment of who must file CAT returns. Currently, Ohio CAT requires either annual or quarterly filing depending on the entity’s Ohio gross receipts. All CAT taxpayers must file quarterly returns for tax periods beginning on or after January 1, 2024. Current annual taxpayers must file a final annual return, due May 10, 2024.
Prior to 2024, entities with greater than $150,000 of Ohio taxable gross receipts were subject to the CAT and were required to file and pay the AMT. Starting January 1, 2024, entities that do not exceed $3 million of Ohio gross receipts are not subject to CAT and do not have to file returns. This amount increases to $6 million for periods starting January 1, 2025. Entities that exceed these thresholds must file quarterly returns and remit CAT.
Current CAT taxpayers who anticipate having $3 million or less in taxable gross receipts during calendar year 2024 should file final returns and close their CAT accounts to avoid potential notices and assessments. CAT accounts can be canceled through the Ohio Business Gateway, or by submitting a Business Account Update Form to the Ohio Department of Taxation.
Schneider Downs State and Local Tax (SALT) professionals are poised to help taxpayers with the Ohio Commercial Activity Tax, including determining CAT liability and compliance with updated filing requirements. Please contact Stephen Worth or Mark Balistrieri with questions about Ohio’s Commercial Activity Tax or other state and local tax matters.
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