Key Changes to Ohio’s Commercial Activity Tax (CAT) and What They Mean for Businesses
The Commercial Activity Tax (CAT) has undergone a significant transformation. Starting in 2024, businesses with taxable gross receipts of $3 million or less will be exempt from CAT. This threshold increases to $6 million for tax periods beginning in 2025. As a result, almost 90% of Ohio-based businesses will no longer need to pay CAT, benefiting around 145,000 of the current 163,000 CAT payers. However, businesses with taxable gross receipts exceeding the exemption amount will continue to pay the current CAT rate of 0.26% on the excess.
While the CAT has seen its first major change since its inception in 2005, there were some vetoes that affected the inflationary adjustment to the exemption thresholds. Additionally, businesses with annual gross receipts exceeding $150,000 but less than $6 million must still file quarterly tax returns, even if they owe no tax. OSCPA is actively working to seek guidance from the Ohio Department of Taxation on administrative relief options for these taxpayers and will engage in discussions with legislators to explore filing relief for those who won’t owe any tax.
Stay tuned for further updates and guidance from OSCPA as we navigate these changes and work towards ensuring a smooth transition for Ohio businesses. We remain committed to supporting you during these transformations in the CAT framework.