Effective January 1, 2024, the Ohio Commercial Activity Tax (CAT) will undergo major changes following the enactment of Am. Sub. H.B. 33 of the 135th Ohio General Assembly.
For tax periods beginning on and after January 1, 2024, the CAT annual minimum tax is eliminated, and the exclusion amount is increased from $1 million to $3 million. Therefore, taxpayers with taxable gross receipts of $3 million or less per calendar year will no longer be subject to the CAT.
The Ohio Department of Taxation has advised both annual and quarterly taxpayers who anticipate having less than $3 million in taxable gross receipts in tax year 2024 to cancel their CAT account immediately and use an effective date of December 31, 2023.
Taxpayers can visit the Ohio Business Gateway and select the CAT Cancel Account transaction, to cancel your CAT account. Alternatively, taxpayers may check the cancellation check box when filing their last return. If unable to cancel using either of these methods, taxpayers may submit a Business Account Update Form to cancel the account.
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%.
Taxpayers in Ohio should contact one of our tax experts for advice on how these new changes will impact reporting in 2024.
Evolved is a tax compliance and advisory firm with offices in New York City, Philadelphia and Stamford, serving clients nationally throughout the US. We provide tax provision, private equity and venture capital services alongside advisory for high net-worth tax and family office tax.
