eriksjaastad Ohio Commercial Activity Tax (CAT) Calculator
Compute Ohio CAT liability for businesses with Ohio-sourced gross receipts. Handles the $6M exclusion threshold, 0.26% flat rate, quarterly filing, and bright-line nexus rules per Ohio Department of Taxation.
When to Activate
- User mentions "Ohio CAT", "commercial activity tax", "Ohio business tax", "Ohio gross receipts"
- Computing quarterly or annual CAT liability
- Determining if a business must register for the CAT
- Evaluating Ohio nexus for an out-of-state business
- Any business with gross receipts sourced to Ohio
What This Tax Is
Ohio's Commercial Activity Tax (CAT) is a gross receipts tax — a privilege tax measured by gross receipts from business activity in Ohio. Unlike income taxes, the CAT does not allow deductions for expenses, costs of goods sold, or other business costs[^1].
The CAT applies to all business entity types — sole proprietors, partnerships, LLCs, corporations, and S-corps. It is separate from Ohio's corporate franchise tax (which it replaced in 2005) and municipal income taxes. Financial institutions and insurance companies are generally exempt[^1].
As of 2025, the exclusion threshold increased to $6 million, meaning approximately 90% of Ohio businesses no longer owe the CAT[^2].
[^1]: Ohio Department of Taxation — Commercial Activity Tax [^2]: Brady Ware — 2025 Ohio CAT Updates
Rate Structure
The CAT has a single flat rate with no tiers or classifications:
| Component | Amount | Source |
|---|---|---|
| Exclusion threshold | $6,000,000 (effective 2025) | Brady Ware — CAT Update |
| Tax rate | 0.26% on gross receipts over $6M | Brady Ware — CAT Update |
Formula:
CAT = 0.0026 × max(ohio_taxable_gross_receipts - $6,000,000, 0)
No base tax amount. No tiered rates. No classification-based rates. The Annual Minimum Tax (AMT) was eliminated as part of the 2024 threshold changes[^2].
Threshold History
| Year | Exclusion Threshold | Source |
|---|---|---|
| Through 2023 | $150,000 | RubinBrown — CAT Changes |
| 2024 | $3,000,000 | RubinBrown — CAT Changes |
| 2025+ | $6,000,000 | Brady Ware — CAT Update |
Surcharge
Ohio does not impose an additional surcharge on the CAT for high-grossing businesses.
Credits and Exemptions
Exempt Entities
| Entity Type | Source |
|---|---|
| Financial institutions (subject to separate financial institutions tax) | Ohio DOR — CAT |
| Insurance companies (subject to separate insurance premium tax) | Ohio DOR — CAT |
| Certain qualifying dealers in intangibles | Ohio DOR — CAT |
Ownership Aggregation Rule
Individuals holding over 50% ownership in multiple businesses must combine gross receipts across all owned entities to determine whether the $6M threshold is met[^2]. This prevents splitting a business into smaller entities to avoid the CAT.
No Cost Subtraction
Unlike Oregon's CAT, Ohio's CAT offers no subtraction for costs, expenses, or labor. The tax is computed on gross receipts without any deductions[^1].
Filing Requirements
Registration Threshold
Businesses with more than $6 million in Ohio taxable gross receipts must register for the CAT. Businesses at or below $6 million may cancel their CAT account[^2].
Filing Frequency and Due Dates
The CAT is filed quarterly for businesses above the threshold:
| Quarter | Period | Due Date | Source |
|---|---|---|---|
| Q1 | Jan 1 – Mar 31 | May 10 | Brady Ware — CAT Update |
| Q2 | Apr 1 – Jun 30 | August 10 | Brady Ware — CAT Update |
| Q3 | Jul 1 – Sep 30 | November 10 | Brady Ware — CAT Update |
| Q4 | Oct 1 – Dec 31 | February 10 | Brady Ware — CAT Update |
Due on the 10th day of the second month following the end of each calendar quarter.
Situsing Rules
Gross receipts are sourced ("sitused") to Ohio based on where the benefit of the service or product is received, not where the business is located. Ohio uses an ultimate destination rule for tangible goods and a benefit received rule for services[^3].
[^3]: Taft Law — Ultimate Destination Rule
Nexus
Ohio uses a bright-line economic nexus standard — the first state to adopt one (2005). A business has CAT nexus if any of the following apply during the calendar year[^4]:
| Nexus Trigger | Threshold | Source |
|---|---|---|
| Ohio taxable gross receipts | $500,000 | ORC 5751.01 |
| Ohio property | $50,000 | ORC 5751.01 |
| Ohio payroll | $50,000 | ORC 5751.01 |
| 25% of total property, payroll, or receipts in Ohio | Any amount | ORC 5751.01 |
| Authorized to do business in Ohio | — | ORC 5751.01 |
| Owns or uses capital in Ohio | — | ORC 5751.01 |
Note: Having nexus does not mean you owe tax — you must also exceed the $6M gross receipts threshold. Many businesses have nexus but fall below the threshold[^4].
[^4]: Ohio Revised Code § 5751.01 and Plante Moran — CAT Bright-Line Nexus
City/Local Tax Overlays
Ohio cities impose municipal income taxes on business net profits — these are net income taxes, not gross receipts taxes, and are separate from the CAT.
Major Ohio cities with business income taxes:
| City | Rate | Tax Type | Source |
|---|---|---|---|
| Columbus | 2.50% | Net profit | Columbus Income Tax |
| Cleveland | 2.50% | Net profit | CCA Tax Rates |
| Cincinnati | 1.80% | Net profit | Cincinnati Finance |
See references/city-taxes.md for full details on rates, filing requirements, and administration.
Calculation Process
Step 1: Determine Ohio Taxable Gross Receipts
Sum all gross receipts sourced to Ohio using situsing rules (ultimate destination for goods, benefit received for services).
Step 2: Check Threshold
- At or below $6M: No tax due. Consider canceling CAT account.
- Over $6M: Proceed to Step 3.
Step 3: Compute CAT
cat = 0.0026 × (ohio_gross_receipts - $6,000,000)
Step 4: Quarterly Payments
Divide annual estimated liability by 4 for quarterly payments.
Step 5: Check for Municipal Income Taxes
If operating in an Ohio city with a municipal income tax, compute city net profit tax separately.
Example: Ohio Manufacturing Company
Annual Ohio taxable gross receipts: $15,000,000
Step 1: Ohio gross receipts = $15,000,000
Step 2: Over $6M → tax applies
Step 3: CAT = 0.0026 × ($15,000,000 - $6,000,000)
CAT = 0.0026 × $9,000,000
CAT = $23,400.00
Step 4: Quarterly payment = $23,400 / 4 = $5,850.00
Annual CAT liability: $23,400.00
Common Mistakes
- Not aggregating ownership — Individuals with 50%+ ownership in multiple businesses must combine receipts to determine if the $6M threshold is met[^2]
- Deducting expenses — Ohio's CAT is on gross receipts with no deductions for COGS, labor, or other costs (unlike Oregon's CAT)[^1]
- Confusing CAT with municipal income tax — The CAT is a state-level gross receipts tax; municipal taxes are separate net income taxes on business profits
- Missing the nexus triggers — Nexus exists at $500K in Ohio receipts, but tax isn't due until $6M. Registration and filing obligations can differ[^4]
- Wrong situsing — Receipts are sourced to where the benefit is received, not where the seller is located[^3]
- Not canceling unused accounts — Businesses that drop below $6M should cancel their CAT account to avoid unnecessary filing obligations[^2]
- Missing quarterly due dates — Due on the 10th of the second month after quarter-end (not end of month like many other states)
References
Official Ohio Department of Taxation
Ohio Revised Code
Analysis
- Brady Ware — 2025 Ohio CAT Updates
- RubinBrown — 2025 Changes to Ohio CAT
- Taft Law — Ultimate Destination Rule
City Taxes
Output Format
When computing CAT, present results as:
## Ohio CAT — [Period]
| Item | Amount |
|---|---|
| Ohio Taxable Gross Receipts | $XX,XXX,XXX.XX |
| Exclusion Threshold | ($6,000,000.00) |
| Taxable Amount | $XX,XXX,XXX.XX |
| Rate | 0.26% |
| **Total CAT Due** | **$XX,XXX.XX** |
| Quarterly Payment | $X,XXX.XX |
| Due Date | [date] |
*Municipal income taxes (if applicable):*
| City | Rate | Net Profit | Tax Due |
|---|---|---|---|
| [City] | X.XX% | $XX,XXX | $X,XXX |
Constraints
- MUST use Decimal arithmetic for all money calculations — never floats
- MUST NOT suggest deducting expenses from CAT gross receipts
- MUST check ownership aggregation rules for multi-entity owners
- MUST apply situsing rules (ultimate destination / benefit received) when determining Ohio receipts
- MUST check for municipal income tax obligations in addition to state CAT
- MUST warn if gross receipts approach the $6M threshold within 10%
- MUST warn and show extrapolation method when estimating annual liability from partial-year data
- MUST note that quarterly due dates are the 10th of the second month after quarter-end
- MUST cite sources when presenting rates or thresholds to the user
Disclaimer
This provides general tax guidance based on publicly available information. It is not legal or tax advice. Consult a qualified tax professional for your specific situation.