Reminder: Changes are coming soon to Ohio's Commercial Activity Tax

As a result of the recent passage of Am. Sub. H.B. 33 of the 135th Ohio General Assembly, beginning in 2024, businesses with taxable gross receipts of $3 million or less and, for tax periods beginning in 2025 and thereafter, businesses with taxable gross receipts of $6 million or less will no longer be subject to the CAT. The Society previously reported on the changes here.  

H.B. 33 also eliminated the annual minimum tax and annual filing beginning in 2024. Taxpayers will deduct the exclusion amount of $3 million in 2024 and $6 million in 2025 and thereafter from their taxable gross receipts for the calendar year, and any taxable gross receipts in excess of the exclusion amount are subject to the 0.26% tax rate.   

As a result of these changes, a large majority of taxpayers will not owe CAT but those taxpayers having more than $150,000 of gross receipts may need to file quarterly zero-dollar tax returns UNLESS they take action to cancel their accounts. The Ohio Department of Taxation has released several FAQs on this topic in addition to Information Release CAT 2023-01. 

For a taxpayer that will not be subject to the CAT in 2024, its CAT account may be cancelled now or with the return in 2024. The 2023 CAT annual return (due in May 2024) and the 2023 fourth quarter return (due in February 2024) will both have a checkbox on the return that allows a taxpayer to easily cancel the account back to 12/31/2023 by checking the box.  While taxpayers can cancel their accounts now, they can also cancel their accounts when they file their final returns next year.  

CAT changes effective Jan. 1, 2024:  

• The annual minimum tax is eliminated, for tax periods 2024 and thereafter  

• The annual exclusion amount is increased to $3 million  

• Taxpayers with taxable gross receipts of $3 million or less per calendar year will no longer be subject to the CAT  

• The 2023 annual return due May 10, 2024, is the final return required for annual filers  

• Annual taxpayers will need to cancel their CAT accounts when filing their final 2023 returns. Taxpayers should use an effective date of Dec. 31, 2023  

• Quarterly taxpayers that anticipate $3 million or less in taxable gross receipts in 2024 should file their final returns, due Feb. 12, 2024, and cancel their CAT accounts with an effective date of Dec. 31, 2023  

• Taxable gross receipts exceeding $3 million will be taxed at 0.26%  

CAT changes effective Jan. 1, 2025:  

• The annual exclusion amount is increased to $6 million  

• Taxpayers with taxable gross receipts of $6 million or less per calendar year will no longer be subject to the CAT  

• Quarterly taxpayers that anticipate $6 million or less in taxable gross receipts in 2025 should file their final returns, due Feb. 10, 2025, and cancel their CAT accounts with an effective date of Dec. 31, 2024  

• Taxable gross receipts exceeding $6 million will be taxed at 0.26%