Vital Changes to Ohio Commercial Activity Tax (CAT) Exclusion and Annual Minimum Tax

Ohio’s 2022 funds invoice incorporates important adjustments to the Ohio Commercial Activity Tax (CAT), which is able to quickly take impact. These adjustments primarily have an effect on the CAT exclusion and annual minimal tax, and will have important implications for businesses in Ohio.

Key Highlights of the CAT Changes

1. Elimination of Annual Minimum Tax: Effective for tax intervals starting on and after January 1, 2024, the CAT annual minimal tax is eradicated.
2. Increased Exclusion Amount: For calendar yr 2024, the exclusion quantity is elevated from $1 million to $3 million. Furthermore, for calendar yr 2025 and thereafter, the exclusion quantity is elevated to $6 million. Businesses with taxable gross receipts beneath these thresholds won’t be required to file a CAT return.

3. Continued CAT Rate: The CAT charge of 0.26% stays unchanged and applies to taxpayers with taxable gross receipts over $3 million in 2024 and over $6 million in 2025 and thereafter. Calculating your taxable gross receipts precisely is necessary to find out the relevant tax charge.
4. Transition to Quarterly Filing: After the 2023 annual CAT returns are filed, annual submitting is eradicated. Starting from tax intervals starting on and after January 1, 2024, all remaining CAT taxpayers should file quarterly returns. This change goals to simplify the submitting course of and enhance compliance.

Next Steps for CAT Compliance

To guarantee compliance with the up to date CAT laws, we suggest taking the next actions:

1. Cancel CAT Account (if relevant): If you anticipate having $3 million or much less in taxable gross receipts throughout calendar yr 2024, you might cancel your CAT account efficient December 31, 2023. Follow the directions supplied within the Information Release to cancel your CAT account.
2. Taxpayers with estimated receipts of lower than $6 million might cancel their CAT account earlier than the 2025 tax yr begins.
3. Review Ohio CAT receipts to be sure to are correctly reporting receipts for the Ohio CAT.

If you might have any questions or need assistance analyzing the affect in your tax position, please attain out to your Marcum advisor at this time.