Changes to Ohio’s Commercial Activity Tax (CAT)

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 from $1 million 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 Dec. 31, 2023.
• Quarterly taxpayers that anticipate $3 million or less in taxable gross receipts in 2024 should file their final returns, due Feb. 12, 2024, and cancel their CAT accounts with an effective date of Dec. 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 Feb. 10, 2025, and cancel their CAT accounts with an effective date of Dec. 31, 2024.
• Taxable gross receipts exceeding $6 million will be taxed at 0.26%.

For a taxpayer that will not be subject to the CAT in 2024, its CAT account may be cancelled NOW or with the return in 2024. The 2023 CAT annual return (due in May 2024) and the 2023 fourth quarter return (due in February 2024) will both have a checkbox on the return that allows a taxpayer to easily cancel the account back to 12/31/2023 by checking the box. While taxpayers can cancel their accounts now, they can also cancel their accounts when they file their final returns next year.

The State is recommending that you cancel the account before year-end, by logging into your Ohio Business Gateway account using the CAT Cancel Account transaction, using the effective date of 12/31/2023. Alternatively, accounts may also be cancelled by submitting Business Account Updated Form (BAUF), which can be found on the Ohio Department of Taxation website.

Combined and consolidated elected taxpayer groups are treated as one taxpayer. The exclusion amount applies to the total taxable gross receipts for the group. If the total taxable gross receipts for the group are under the exclusion amount, the group can cancel the CAT account.

If you close your account, and during 2024 or 2025 your entity goes over the annual exclusion amount, the entity will just need to reactive its CAT account, file and pay tax due.

Remember, if you meet the exclusion and don’t cancel your account, your filing requirement will automatically become quarterly.

Please consult your Brady Ware advisor if you have questions.