Guides
Ohio Commercial Activity Tax (CAT), Explained
The Ohio commercial activity tax (CAT) is a tax on the privilege of doing business in Ohio, measured by a company’s taxable gross receipts rather than its profit. For tax periods beginning in 2025 and after, a business owes the CAT only when its Ohio taxable gross receipts exceed $6 million, and the tax applies at 0.26% to the receipts above that threshold. Every remaining filer now reports on a quarterly basis.
The CAT is administered by the Ohio Department of Taxation and applies broadly to most business types, including C corporations, S corporations, partnerships, LLCs, and sole proprietorships. Because it is a gross-receipts tax, a business can owe it in a year with little or no net income, though the $6 million exclusion now shields most small operators.
What is the Ohio commercial activity tax?
The CAT is an annual privilege tax imposed on gross receipts sitused (sourced) to Ohio. It taxes total business receipts, not profit, so deductions for cost of goods sold, wages, and overhead do not reduce the base the way they do for an income tax. The tax generally applies to any entity type with substantial nexus in Ohio.
Ohio enacted the CAT in 2005 to replace the corporate franchise tax and the tangible personal property tax. It sits apart from Ohio’s income tax and its Ohio sales and use tax, which businesses may owe separately depending on activity. Gross-receipts taxes like the CAT resemble Texas’s approach more than a standard corporate income tax, a contrast covered in the Texas franchise (margin) tax guide.
The 2024 and 2025 exclusion increases
Ohio raised the CAT annual exclusion in two steps: to $3 million for tax year 2024 and to $6 million for tax year 2025 and after. Businesses at or below the applicable exclusion no longer owe the CAT and may cancel their accounts. The prior structure, which reached businesses with as little as $150,000 in receipts, was replaced.
Alongside the higher exclusion, Ohio eliminated the annual minimum tax (the former tiered fee of up to $2,600) starting in 2024. The changes removed an estimated large share of former filers from the system. A business that expected to fall under the new threshold was directed to file a final return and cancel its account with an effective date of December 31 of the prior year.
| CAT feature | 2023 and earlier | 2024 | 2025 and after |
|---|---|---|---|
| Annual exclusion | $1,000,000 | $3,000,000 | $6,000,000 |
| Rate on receipts above exclusion | 0.26% | 0.26% | 0.26% |
| Annual minimum tax (AMT) | Up to $2,600 | Eliminated | Eliminated |
| Annual filing option | Available | Eliminated | Eliminated |
| Filing frequency | Annual or quarterly | Quarterly only | Quarterly only |
Figures reflect Ohio Department of Taxation guidance; a business’s exact position can vary by receipt sourcing and entity structure.
How the 0.26% rate is calculated
The CAT applies at 0.26% (0.0026) to Ohio taxable gross receipts above the $6 million exclusion, so the first $6 million is untaxed. A filer subtracts the exclusion from its taxable gross receipts and multiplies the remainder by the rate. The rate itself did not change during the recent reforms.
For example, a business with $10 million in Ohio taxable gross receipts in 2025 would subtract the $6 million exclusion, leaving $4 million, then apply 0.26% for a CAT of roughly $10,400. A business with exactly $6 million or less would owe $0 and, in many cases, would not need a CAT account at all. Actual liability depends on how receipts are sitused to Ohio.
Who must register and file
A business must register for the CAT within 30 days of its Ohio taxable gross receipts exceeding the $6 million threshold for the tax year. Registration is done through the Ohio Business Gateway. Late registration can carry a penalty of up to $100 per month, capped at $1,000, so tracking receipts against the threshold matters.
Out-of-state businesses can owe the CAT when they have “substantial nexus” with Ohio. Ohio’s bright-line presence standard is met when a person has at least $500,000 of Ohio taxable gross receipts, at least $50,000 of Ohio property, at least $50,000 of Ohio payroll, or at least 25% of total property, payroll, or receipts in Ohio during the calendar year. This receipts-based nexus concept parallels the sales-tax framework in the economic nexus after Wayfair guide. In practice, because the exclusion is now $6 million, most businesses that cross the bright-line nexus line still fall below the amount that triggers actual tax.
The CAT can apply across entity types, so the choice between an LLC, S corporation, or C corporation does not by itself change CAT exposure the way it can affect income tax, a distinction covered in the business entity comparison.
Quarterly filing and payment
For 2024 and after, all CAT taxpayers file quarterly; the annual filing option was removed. Quarterly returns and payments are generally due on May 10, August 10, November 10, and February 10, covering the four calendar quarters. Returns are filed electronically through the Ohio Business Gateway.
The first quarter return (due May 10) is where the $6 million exclusion is applied for the year. Because the exclusion is claimed against the earliest receipts, a filer may show little or no tax in early quarters and more later once cumulative receipts pass $6 million. Businesses that expect to stay under the threshold may cancel their accounts to avoid filing, though they should confirm their situation each year because thresholds and receipts can shift.
FAQ
Is the Ohio CAT a tax on income or on receipts?
The CAT is a gross-receipts tax, not an income tax. It is measured by taxable gross receipts sitused to Ohio, before deductions for cost of goods sold, wages, or other expenses. A business can owe the CAT in a year it reports a net loss, though the $6 million exclusion now removes most smaller businesses from any liability.
Do I still owe the CAT if my receipts are under $6 million?
Generally no. For tax periods beginning in 2025 and after, businesses with $6 million or less in Ohio taxable gross receipts are not subject to the CAT. Many former filers cancelled their accounts after the exclusion rose. A business near the threshold should track receipts throughout the year, because crossing $6 million can create a filing and registration duty.
What is the current CAT rate?
The CAT rate is 0.26% (0.0026), applied only to Ohio taxable gross receipts above the $6 million annual exclusion. The rate was not changed by the 2024 and 2025 reforms; those changes raised the exclusion and removed the annual minimum tax. A business with $6 million or less in taxable gross receipts effectively pays a 0% CAT.
When are Ohio CAT returns due?
CAT returns are filed quarterly, generally due May 10, August 10, November 10, and February 10. The annual filing option ended after tax year 2023, so all remaining taxpayers file quarterly through the Ohio Business Gateway. The exclusion is applied starting with the first quarter, which can shift most of a filer’s tax into later quarters of the year.
Does an out-of-state business have to register for the CAT?
It can. An out-of-state business may owe the CAT if it has substantial nexus with Ohio, defined in part by a bright-line presence of at least $500,000 in Ohio taxable gross receipts during the calendar year. In practice, because the exclusion is $6 million, a remote seller often has nexus without owing tax until its Ohio receipts exceed the exclusion.
How does the CAT compare to Ohio sales tax?
They are separate taxes. The CAT is paid by the business on its own gross receipts, while sales tax is collected from customers on taxable retail sales and remitted to the state. A business can owe one, both, or neither depending on its activities. Details on rates and filing appear in the Ohio sales tax guide, and broader state comparisons in the state and local tax burden report.
Reviewed by The Ledgerism Editorial Team. Last reviewed: July 2026.