Changes to Ohio's
Commercial Activity Tax

Important Changes Coming to the Ohio Commercial Activity Tax
As a result of the recent passage of Am. Sub. H.B. 33 of the 135th Ohio General Assembly, beginning in 2024, businesses with taxable gross receipts of $3 million or less and, for tax periods beginning in 2025 and thereafter, businesses with taxable gross receipts of $6 million or less will no longer be subject to the CAT.
 
H.B. 33 eliminated the annual minimum tax beginning in 2024.  The bill also increased the annual exclusion amount to $3 million in 2024 and to $6 million in 2025 and thereafter. Taxpayers will deduct the exclusion amount from their taxable gross receipts for the calendar year, and any taxable gross receipts in excess of the exclusion amount are subject to the 0.26% tax rate.

CAT 2023-01 - Commercial Activity Tax: Changes to the CAT Exclusion and Annual Minimum Tax

Summary of Changes
CAT Changes Effective January 1, 2024

• The annual minimum tax is eliminated, for tax periods 2024 and thereafter.
• The annual exclusion amount is increased to $3 million.
• Taxpayers with taxable gross receipts of $3 million or less per calendar year will no longer be subject to the CAT.
• The 2023 annual return due May 10, 2024, is the final return required for annual filers.
• Annual taxpayers will need to cancel their CAT accounts when filing their final 2023 returns.  Taxpayers should use an effective date of December 31, 2023. 
• Quarterly taxpayers that anticipate $3 million or less in taxable gross receipts in 2024 should file their final returns, due February 12, 2024, and cancel their CAT accounts with an effective date of December 31, 2023.
• Taxable gross receipts exceeding $3 million will be taxed at 0.26%

CAT Changes Effective January 1, 2025

• The annual exclusion amount is increased to $6 million.
• Taxpayers with taxable gross receipts of $6 million or less per calendar year will no longer be subject to the CAT.
• Quarterly taxpayers that anticipate $6 million or less in taxable gross receipts in 2025 should file their final returns, due February 10, 2025, and cancel their CAT accounts with an effective date of December 31, 2024.
• Taxable gross receipts exceeding $6 million will be taxed at 0.26%.

Frequently Asked Questions 

1. What should I do now if I will not have more than $3 million in taxable gross receipts in 2024?
   1. Cancel your CAT account with an effective date of December 31, 2023.
   2. File your final return in 2024:
      1. By May 10, 2024, for annual filers 
      2. By February 12, 2024, for quarterly filers
2. Who must file the CAT?

   1. Who Must File the Commercial Activity Tax
      Calendar Year	Taxpayer's Taxable Gross Receipts (TGR)
      2005 Through 2023	TGR > $150,00 (with bright-line presence)
      2024	TGR > $3,000,000
      2025 and thereafter	TGR > $6,000,000

3. Do these changes impact periods prior to 2024?
   1. The CAT imposed for tax periods prior to 2024 did not change.  See CAT Information Release 2013-05 for more information. 
4. If I will no longer be subject to the CAT in 2024, do I still have to file a CAT return for 2023?
   1. Yes, taxpayers subject to the CAT must file the 2023 return(s).  Annual taxpayers must file the 2023 return by May 10, 2024.  Quarterly taxpayers must file returns for all four quarters of 2023.  The final quarterly return for taxpayers with $3 million or less in taxable gross receipts is due February 12, 2024. 
5. As an annual filer, will I owe tax for 2023?
   1. As the annual minimum tax for 2023 was prepaid with the 2022 return, no tax will be due with the final return unless taxable gross receipts exceeded $1 million in 2023.  
6. What happens if I have taxable gross receipts that are slightly below the new exclusion amount and will likely increase in the next few years? 
   1. If you anticipate exceeding $3 million in taxable gross receipts in 2024, it is recommended you continue filing quarterly returns.  No tax will be due until you exceed $3 million in taxable gross receipts.  Alternatively, you may cancel the account and reactivate the account when you exceed the new exclusion amount.  Taxpayers are required to register and pay the tax within thirty days of exceeding the exclusion amount.
7. I have a new business that exceeded $150,000 in taxable gross receipts in May 2023.  Will I still need to register for the CAT if I will not exceed $3 million in 2024? 
   1. The CAT in calendar year 2023 applies to a taxpayer with $150,000 in taxable gross receipts.  If you became subject to the CAT for 2023, you must register, file, and pay any tax due for calendar year 2023.  Once the 2023 return has been filed, you may cancel your CAT account with an effective date of December 31, 2023. 
8. When should I cancel my CAT account?
   1. If you anticipate that you will have $3 million or less in taxable gross receipts in 2024, you may cancel your account now with an effective date of December 31, 2023.  Please note, you must still file the 2023 tax return in 2024.  For annual taxpayers, the 2023 return is due May 10, 2024.  For quarterly taxpayers, the 4th quarter of 2023 return is due February 12, 2024.  Alternatively, taxpayers may wait until they file the final return and cancel the account at that time.
9. How do I cancel my CAT account?
   1. Accounts may be cancelled on the Gateway by using the CAT Cancel Account transaction (preferred method). Alternatively, accounts may also be cancelled by submitting form Business Account Updated Form (BAUF).  
10. What if I do not cancel my account? 
    1. All registered CAT taxpayers with active accounts are required to file returns, even if they do not meet the taxable gross receipts threshold.  If a taxpayer does not cancel its CAT account and fails to file required returns, the taxpayer may receive delinquency notices and assessments.  Please note that beginning January 1, 2024, annual filing is eliminated, and all remaining taxpayers must file on a quarterly basis.  
11. I am a combined or consolidated elected taxpayer.  Does each member of the group account need to reach the new exclusion amount to remain subject to the CAT? 
    1. No, the exclusion amount applies to the total taxable gross receipts for the group.  Combined and consolidated elected taxpayer groups must consider the taxable gross receipts of all members of the group in determining whether the taxpayer group will exceed the exclusion amount of $3 million in 2024 and $6 million in 2025 and thereafter.

Tax Alerts
The Department of Taxation will provide additional details regarding this change as they become available.  Taxpayers can sign up for tax alerts to be informed of any updates by selecting the link provided below.