Is Your Business Subject to CAT Tax?

Sue Schloemer

Jan 15, 2025

Ohio’s Commercial Activity Tax (CAT) has undergone significant changes for 2024 and 2025, reducing the tax burden for many small businesses.

Here’s a brief update on the CAT tax changes:

Increased exclusion thresholds:

2024: Businesses with taxable gross receipts of $3 million or less are exempt from CAT.
2025 and beyond: The exemption threshold increases to $6 million.
Elimination of annual minimum tax: The annual minimum tax, previously ranging from $150 to $2,600, has been eliminated for tax periods starting in 2024.

Filing requirements:

Annual filings are eliminated after the 2023 tax year.
All taxpayers subject to CAT must now file quarterly returns.
Businesses expecting taxable receipts below the new thresholds should consider canceling their CAT accounts. (Please note – Businesses that cancel their accounts but later exceed the threshold must reactivate their account and pay CAT within 30 days.)
Taxpayers who don’t cancel their accounts but fall below the threshold will need to file quarterly zero-dollar tax returns.
The CAT rate remains unchanged at 0.26% for taxable gross receipts above the exclusion amount.

These changes significantly reduce the number of businesses subject to CAT, but proper account management is crucial to avoid unnecessary filing requirements or potential delinquency notices.

Schedule an appointment to learn how we can support you

More Resources

Guide: Next Level Accounting Services for Your Growing Business

Guide: Build a Better Business by the Numbers

Case Study: Strategic Accounting Support from Acquisition to Sale

About The Author

Sue enjoys helping clients succeed. Her breadth and depth of accounting knowledge combined with over 25 years of…

sschloemer@kirschcpa.com

Sign Up for Email Updates

Accounting & Financial News

Important Changes to Beneficial Ownership Information (BOI) Reporting Deadlines

On February 18, 2025, action by the U.S. District Court for the Eastern District of Texas resulted in the reinstatement…

The Advantages of Monthly vs. Quarterly Financial Statements

In the fast-paced world of business, a lot can change in just a few weeks, let alone three months. Reviewing…

A Review of Inventory Accounting for Construction Companies

Many construction businesses reach a point in their growth when they decide to maintain inventories. They might…

Frequently Asked Questions

How can I manage cash flow better?

Good cash flow management and forecasting are essential for maintaining the financial health of your business. Having a rolling 12-month forecast of revenues and expenses helps you proactively avoid shortfalls and capitalize on opportunities. Learn more >

How can my business benefit from outsourced CFO services?

Outsourced CFO services, also known as fractional or virtual CFO services, let small and mid-size businesses leverage the deep financial expertise and strategic insights needed to accelerate growth and profitability for a fraction of the cost of hiring a full-time CFO. Key offerings include profitability analysis, cash flow forecasting, KPI benchmarking, and budgeting. Learn more >

How can I ensure that I don’t pay more taxes than necessary?

Effective tax planning involves leveraging all available tax credits, avoiding unpleasant surprises, keeping up with changes in the law, and ensuring you pay only your fair share. Learn more >

How can a CPA firm increase the profitability and value of my business?

When you partner with an accounting firm that offers advisory services, you will have the clear financial visibility needed to confidently make big decisions and drive profitable growth for your business. Learn more >

What should I look for in an outsourced accounting firm?

Growing a business requires more than tax preparation and basic accounting services. You need a holistic and forward-looking approach to your financial health. For best results, look for a partner who employs a proven process and a diverse range of services tailored to optimize cash flow, increase profitability, and maximize the value of your business. Learn more >

Recent Posts