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.

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