The CAT’s Out of the Bag: How Ohio Businesses Will Be Impacted by New Exemptions

Ohio’s Commercial Activity Tax (CAT) has remained relatively unchanged since its inception in 2005. However, with the recent enactment of House Bill 33, Ohio businesses are about to see some significant shifts.

What’s changing?

Starting in 2024, businesses with taxable gross receipts of $3 million or less will be exempt from the CAT. This exemption amount doubles to $6 million or less for tax periods beginning in 2025. 

Currently, businesses that have annual taxable gross receipts of greater than $150K and less than $1 million are required to file annually, and the tax begins at $150. Businesses that generate over $1 million annually are required to file quarterly.

All of this is changing in 2024. 

How will it affect you?

All businesses that file (annually or quarterly) today, and generate $3 million or less in taxable annual gross receipts will no longer need to file the CAT tax.

For those of you who fall into this category, May 10, 2024 will be your last annual CAT tax filing. You will file your CAT tax that is due from 2023, but you will not pay the minimum $150 you would normally have to pay against the next year’s (2024) anticipated CAT tax. 

Annual filings will cease completely, and all businesses that generate more than $3 million in taxable gross receipts will be required to file quarterly going forward.

Then, in 2025, the minimum threshold will double to $6 million in annual revenue.

What you need to do

The Ohio Department of Taxation (ODT) recommends that for 2024, taxpayers with taxable gross receipts of less than $3 million should cancel their accounts. You’ll file a final return for 2023 on May 10, 2024.

Then, for 2025, taxpayers with taxable gross receipts of less than $6 million will cancel their account at the end of 2024, filing the final return for 2024.

For Harper & Company clients, you don’t have to do a thing. We will take care of canceling your account. 

These CAT changes are monumental for Ohio businesses. While many will benefit from the increased exemptions, it’s important to stay informed. Questions? We’re happy to help. Call our office anytime at (614) 456-7222 or email us at tax@harpercpaplus.com.

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