The Ohio Commercial Activity Tax (CAT) is the annual privilege tax measured by gross receipts on business activities in Ohio. The CAT has undergone significant changes recently, and businesses need to keep up with the changes as we enter into the fourth quarter of 2024 to ensure they are in proper compliance with filing requirements.
The CAT applies to all types of businesses, including manufacturers and all entities regardless of the form. The CAT also applies to businesses whether located within Ohio or located outside of Ohio with taxable sales within the state. Some forms of income are excluded from taxable gross receipts and are not subject to CAT such as interest (other than from credit sales), dividends, capital gains, wages reported on W-2s, or gifts.
For tax periods before 2024, taxpayers with taxable gross receipts of more than $150,000 per calendar year were required to have a CAT account with the state of Ohio and subject to CAT.
Beginning January 1, 2024, a taxpayer with taxable gross receipts of $3 million per calendar year were subject to CAT filings. Businesses that were under $3 million in taxable gross receipts were able to cancel their CAT accounts for 2024. Also, annual filings were eliminated for tax years after 2023 and all eligible filers are required to submit CAT filings on a quarterly basis.
Beginning January 1, 2025, the taxable gross receipts threshold will be increased to $6 million per calendar year. Businesses that are under the $6 million taxable gross receipts threshold will be able to cancel their CAT accounts in 2025. The $6 million taxable gross receipts threshold will be in effect for calendar years beyond 2025 as well.
Taxpayers planning to cancel their CAT account can do so by either submitting the Business Account Update Form available on the Ohio Department of Taxation’s website or through the CAT Cancel Account transaction on the Ohio Business Gateway website when submitting the final quarter’s return for the previous year.
Further information about required CAT filings can be found on the Ohio Department of Taxation website.
For more information, or to discuss CAT requirements, contact HBK Manufacturing Solutions at 330-758-8613 or by emailing manufacturing@hbkcpa.com.
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