Changes coming to the Ohio Commercial Activity Tax
As a result of the Ohio Budget bill passed earlier this year, businesses will see changes to the Commercial Activity Tax (CAT) beginning with the calendar year 2024.
Under the current rules, all businesses with more than $150,000 of sales but less than $1 million in sales in Ohio are required to file annual CAT tax returns and pay a $150 annual minimum tax. Businesses with Ohio sales more than $1 million are required to file a return quarterly and pay tax at a rate of 0.26% on any taxable receipts in excess of $1 million.
Under the new rules beginning in 2024, the annual minimum tax is eliminated. Additionally, the annual exclusion amount previously set at $1 million is increased to $3 million for 2024 and $6 million for 2025. CAT tax will continue to be calculated on Ohio sales more than $3 million (2024) and $6 million (2025).
As a result of these changes, taxpayers with taxable gross receipts of $3 million or less per calendar year will no longer be subject to the CAT after 2023. These taxpayers will still need to file a final return in February 2024 (quarterly filers) or May 2024 (annual filers).
Additionally, taxpayers who anticipate less than $3 million in taxable Gross Receipts may cancel their CAT accounts now with an effective date of December 31, 2023. Businesses that cancel their accounts will receive a confirmation letter from the State of Ohio.
Moorman, Harting & Company is currently working with its business clients to cancel all eligible accounts. In the meantime, if you have questions on this matter, please contact us!
