The newly enacted House Bill 33 amends Ohio’s Commercial Activity Tax (CAT) exemption amounts. Though still awaiting official guidance from the Ohio Department of Taxation (ODT), the Ohio Society of CPAs (OSCPA) provides a helpful article summarizing the implications, which you can access below. Here are some key takeaways.
- The new law exempts from CAT all taxable gross receipts of $3 million or less for tax periods beginning in 2024, and taxable gross receipts of $6 million or less for tax periods beginning in 2025. Businesses with taxable gross receipts that exceed the exemption thresholds will be subject to the current CAT rate of 0.26% only on the excess.
- The new exemptions apply to all businesses and represent a significant increase to the current exemption for taxable gross receipts of $150,000 or less, which has not increased in 18 years. Following the two-year transition period, approximately 90% of all Ohio businesses will no longer pay CAT.
- While the vast majority of taxpayers will not owe CAT, taxpayers with gross receipts of more than $150,000 may be required to file quarterly zero-dollar tax returns unless they cancel their accounts. The annual filing requirement and the annual minimum tax (AMT) will be removed.
Currently, the OSCPA is recommending the following actions while awaiting official guidance:
2024 – Taxpayers with taxable gross receipts not exceeding $3 million:
- In general, taxpayers may delete their account as of December 31, 2023.
- File a final return for 2023. The deadline for annual filers is 5/10/2024; the deadline for quarterly filers is 2/10/2024.
2025 – Taxpayers with taxable gross receipts not exceeding $6 million:
- In general, taxpayers may delete their account as of December 31, 2024.
- File a final return for 2024. The deadline for quarterly filers is February 10, 2025.
According to ODT, most taxpayers should terminate their accounts unless they are close to the $3 million or $6 million thresholds in 2024 or 2025.
You can read the full OSCPA article here: CAT Changes Will Impact Upcoming Filings
If you have any questions or would like more information, please reach out to your HW&Co. advisor.
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