Ohio’s commercial activity tax underwent significant changes effective January 1, 2024, reshaping filing obligations and tax thresholds for thousands of businesses operating in the state. Whether you are a small business owner approaching the exclusion threshold or a large enterprise filing quarterly returns, understanding these Ohio CAT tax changes is essential for staying compliant and avoiding unnecessary costs.
The changes stem from Ohio’s Budget Bill (H.B. 33), which was signed into law to modernize the state’s gross receipts tax structure. The bill eliminated the annual minimum tax, raised the exclusion amount, and shifted all ongoing filers to a quarterly schedule. Below is a detailed breakdown of what changed, who is affected, and what steps businesses should take. For tailored support, our tax advisory services team helps Ohio businesses evaluate their exposure under the revised rules.
How the Ohio CAT exclusion amount increased
One of the most impactful Ohio commercial activity tax changes is the increase to the annual exclusion amount. Before 2024, businesses with more than $1 million in taxable gross receipts were subject to the CAT. Starting in tax year 2024, that threshold rose to $3 million. For tax year 2025 and beyond, the exclusion climbs further to $6 million.
This means a large number of Ohio businesses that previously owed the commercial activity tax no longer need to file or pay. A company generating $2.5 million in annual gross receipts, for example, was a CAT taxpayer under the old rules but falls below the new threshold and can cancel its CAT account entirely.
The increased exclusion does not change the Ohio CAT tax rate itself. Businesses with taxable gross receipts above the exclusion amount still pay at the 0.26% rate on the portion exceeding the threshold. What changed is simply the dollar amount at which that rate begins to apply.
The annual minimum tax is eliminated
Prior to 2024, every registered CAT taxpayer owed an annual minimum tax regardless of revenue. That flat fee ranged from $150 for smaller filers up to $2,600 for businesses with gross receipts above $4 million. Starting with the 2024 tax period, Ohio eliminated this annual minimum tax entirely.
This elimination provides direct savings for businesses that remain above the exclusion amount, since they no longer owe the flat minimum on top of the 0.26% rate. For businesses below the new $3 million threshold, the minimum tax repeal is moot, and they should cancel their accounts rather than continue filing zero-liability returns.
Annual filings are replaced by quarterly reporting
Ohio eliminated annual CAT filings after tax year 2023. Going forward, every business that exceeds the exclusion amount must file Ohio commercial activity tax returns on a quarterly basis. There is no longer an annual filing option.
This shift to quarterly-only reporting applies to all taxpayers expecting more than $3 million in taxable gross receipts for 2024, or more than $6 million for 2025 and later years. Quarterly filing deadlines follow the standard Ohio schedule, and businesses should update their internal calendars and accounting workflows to reflect the change.
Businesses that were previously annual filers and now expect to remain above the threshold need to register for quarterly filing. Those who fall below the threshold should cancel their CAT accounts instead of converting to quarterly status.
How to cancel your Ohio CAT account
Businesses estimating less than $3 million in taxable gross receipts for 2024 are advised to cancel their Ohio commercial activity tax accounts effective December 31, 2023. Cancellation can be completed through two methods:
- Business Account Update Form: Available through the Ohio Department of Taxation, this form allows businesses to formally request account closure.
- Ohio Business Gateway: Taxpayers can use the CAT Cancel Account transaction while submitting their final annual return through the state’s online portal.
Failing to cancel an account when eligible may result in continued filing obligations and potential penalties for late or missing returns, even if no tax is actually owed. Proactive cancellation is the simplest way to remove ongoing compliance requirements.
Key deadlines for final CAT returns
Ohio set specific deadlines for final returns based on a taxpayer’s prior filing frequency:
- Quarterly filers estimating $3 million or less in 2024 taxable gross receipts must submit their final return by February 12, 2024.
- Annual filers estimating $3 million or less in 2024 taxable gross receipts must submit their final return by May 10, 2024.
Missing these deadlines could trigger late filing penalties, so businesses that planned to cancel should confirm their final returns were submitted on time. If you missed either deadline, contact the Ohio Department of Taxation to discuss options for resolving any outstanding obligations.
Rules for combined and consolidated taxpayer groups
Ohio’s commercial activity tax changes apply specific rules to combined and consolidated elected taxpayers. Under Ohio Revised Code Chapter 5751, a combined taxpayer group or an elective consolidated taxpayer group is treated as a single taxpayer for purposes of the exclusion amount.
This means the taxable gross receipts of all members within the group must be aggregated to determine whether the group exceeds the $3 million exclusion for 2024 or the $6 million exclusion for 2025 and beyond. A parent company with $1.5 million in receipts and a subsidiary with $2 million would combine to $3.5 million, putting the group above the 2024 threshold.
Combined or consolidated groups may continue to file returns as a single taxpayer. However, each group should carefully evaluate whether restructuring or electing out of consolidated status offers any tax advantage under the new thresholds.
What the Ohio CAT tax rate means for your business going forward
The Ohio CAT tax rate remains unchanged at 0.26% of taxable gross receipts above the exclusion amount, codified as 2.6 mills per dollar under Ohio Revised Code Section 5751.03. While the rate itself did not change, the practical impact is substantial. A business generating $5 million in gross receipts in 2024 now pays the 0.26% rate only on the $2 million above the $3 million exclusion, a tax liability of $5,200. Under the old $1 million exclusion, the same business would have owed tax on $4 million, resulting in a $10,400 liability plus the minimum tax.
For 2025 and beyond, the $6 million exclusion reduces the taxable base even further. Many mid-sized Ohio businesses will see their CAT liability drop to zero or near zero under the expanded exclusion.
The Ohio gross receipts tax structure, of which the CAT is the primary component, remains one of the simpler business taxes in the state. Unlike income-based taxes, the CAT applies to top-line revenue regardless of profitability. Businesses should continue to track total gross receipts carefully, especially those near the exclusion threshold, since crossing the line triggers full quarterly filing and payment obligations.
Steps to take now
Businesses affected by these Ohio commercial activity tax changes should take the following actions:
1. Determine your expected gross receipts for the current tax year and compare them against the applicable exclusion amount ($3 million for 2024, $6 million for 2025+).
2. Cancel your CAT account if you fall below the threshold, using the Business Account Update Form or the Ohio Business Gateway.
3. Switch to quarterly filing if you remain above the threshold and were previously an annual filer.
4. Review combined group status if you are part of a consolidated or combined taxpayer group to confirm the aggregate receipts calculation.
5. Consult a tax professional to ensure compliance and explore whether the new thresholds create planning opportunities for your business. Our accounting services team can review your filing status and confirm the right course of action.
Frequently Asked Questions
What is the Ohio commercial activity tax?
The Ohio commercial activity tax (CAT) is a gross receipts tax imposed on businesses with taxable revenue exceeding the annual exclusion amount. It applies at a rate of 0.26% on gross receipts above the threshold, regardless of whether the business is profitable. The CAT replaced Ohio’s corporate franchise tax and tangible personal property tax when it was first enacted.
What is the Ohio CAT tax rate for 2024 and beyond?
The Ohio CAT tax rate is 0.26% of taxable gross receipts above the exclusion amount. This rate has not changed under the 2024 reforms. What changed is the exclusion threshold, which rose from $1 million to $3 million in 2024 and will increase to $6 million in 2025.
How do I cancel my Ohio CAT account?
You can cancel your Ohio CAT account by submitting the Business Account Update Form on the Ohio Department of Taxation website or by using the CAT Cancel Account transaction on the Ohio Business Gateway when you file your final return. Businesses below the $3 million exclusion for 2024 should cancel effective December 31, 2023.
Do I still need to file Ohio CAT returns quarterly?
Only businesses with taxable gross receipts exceeding the exclusion amount ($3 million for 2024, $6 million for 2025+) must file quarterly Ohio CAT returns. Annual filings were eliminated after tax year 2023. If your receipts fall below the threshold, you should cancel your account rather than file zero-liability returns.
What is the Ohio CAT exclusion amount?
The Ohio CAT exclusion amount is the revenue threshold below which no commercial activity tax is owed. It increased from $1 million to $3 million for tax year 2024 and rises to $6 million for tax year 2025 and all subsequent years. Businesses below the exclusion are not required to file or pay.
How do combined taxpayer groups calculate the Ohio CAT exclusion?
Combined and consolidated elected taxpayer groups must aggregate the taxable gross receipts of all members to determine whether the group exceeds the exclusion amount. The group is treated as a single taxpayer under Ohio law. If the combined total exceeds $3 million (2024) or $6 million (2025+), the group must file and pay on the excess.
