Ohio Provides Guidance for Taxpayer on Upcoming CAT Changes

Effective January 1st, 2024, major changes to the reporting requirements for Ohio’s Commercial Activities Tax come into effect, and the state has released additional guidance for taxpayers who are currently filing on how these changes impact them. Under the updates passed this summer, the thresholds for reporting and tax liability will be:

• Effective January 1, 2024, and for all periods after, the CAT annual minimum tax will be eliminated
• For calendar year 2024, the exclusion amount is increased from $1 million to $3 million
• For calendar year 2025 and onward, the exclusion amount is increased to $6 million
• For calendar years 2024 and onward, taxpayers with taxable gross receipts below the annual exclusion amount will not be required to register with the department or file returns

The updates to the law maintain the current tax rate of 0.26% and eliminate the annual filing requirement. Consolidated and combined groups should calculate the filing threshold based on the taxable gross receipts of all members. Annual filing thresholds and minimum tax remain in effect for periods before January 1, 2024.

Taxpayers who will no longer be required to file the CAT in 2024 should cancel their existing accounts at this time with an effective date of December 31, 2023. Accounts may be canceled online with an effective date up to one year in the future, or may be backdated to the last date of their final return. Annual taxpayers who cancel their account will need to file their final return due May 10, 2023, and quarterly taxpayers should file their final Q4 return by February 12, 2024. (Commercial Activity Tax – Information Release CAT 2023-01 – Commercial Activity Tax: Changes to the CAT Exclusion and Annual Minimum Tax, 08/21/2023)