Ohio Commercial Activity Tax (CAT): Who Pays, the $6 Million Exclusion and How to Register

If you operate a business in Ohio or sell products and services into the state, you need to understand the Ohio Commercial Activity Tax. It is not a corporate income tax or sales tax. Instead, it is a gross receipts tax levied on business revenue, and it applies to businesses with Ohio taxable gross receipts above the exclusion amount. This guide explains who pays the CAT, how the tax works, the $6 million exclusion threshold, when to register, how much it costs, and where to file your returns.

What Is the Ohio Commercial Activity Tax?

The Ohio Commercial Activity Tax is a gross receipts tax, not an income tax. It is levied under Ohio Revised Code Chapter 5751 on the total gross receipts of a business operating in Ohio, minus a few narrow exclusions and deductions. The tax rate is 0.26% (or 0.0026 as a decimal) on gross receipts above a threshold amount. The CAT largely replaced Ohio's former corporate franchise tax and applies broadly to LLCs, corporations, sole proprietorships, partnerships, S-corporations, and most other business forms.

The Ohio Department of Taxation administers the CAT. It is separate from federal income tax, Ohio personal income tax (which applies to business owners' net profit), state and local sales taxes, and local income taxes that cities and villages throughout Ohio impose. You may owe multiple taxes simultaneously depending on your business structure, where you operate, and where your customers are located.

The $6 Million Exclusion: Who Must Pay the Ohio CAT in 2026

The most important number in the CAT calculation is the exclusion threshold. If your Ohio taxable gross receipts stay below this amount, you do not owe the CAT and do not need to register with the Ohio Tax Commissioner.

The Ohio CAT exclusion has changed significantly in recent years:

• Before 2024: $150,000 exclusion
• 2024: $3 million exclusion
• 2025 and later (including 2026): $6 million exclusion

This means for tax year 2026, only businesses with Ohio taxable gross receipts exceeding $6 million are required to register and pay the CAT. This is not a deduction you claim on a return. It is a hard threshold. If your gross receipts are $6 million or less, you have no CAT obligation and no filing requirement.

The jump to the $6 million exclusion threshold was enacted through Ohio House Bill 33 and became effective with the 2025 tax year. This change substantially reduced the number of small and mid-size businesses required to comply with the CAT, eliminating the CAT for many Ohio business owners and operators.

How the Ohio CAT Tax Rate Works

The Ohio commercial activity tax rate is straightforward: you pay 0.26% on taxable gross receipts that exceed the $6 million threshold. There is no annual minimum tax (this was eliminated starting in 2024) and no alternative calculation method. Your CAT liability is a simple percentage of the amount over the exclusion.

Here is a worked example of how an Ohio CAT calculation works. Suppose your business had $10 million in Ohio taxable gross receipts in 2026:

• Gross receipts: $10,000,000
• Less: CAT exclusion: ($6,000,000)
• Equals: Taxable gross receipts: $4,000,000
• CAT at 0.26%: $4,000,000 x 0.0026 = $10,400

So your CAT liability for that tax period would be $10,400. If you had $6.2 million in gross receipts, you would owe: $200,000 x 0.0026 = $520. The CAT applies evenly to all taxable receipts above the threshold.

What Counts as Ohio Taxable Gross Receipts

For CAT purposes, "Ohio taxable gross receipts" means revenue your business receives from all sources while operating in Ohio. This includes sales revenue, service income, rental income, royalties, consulting fees, and other business receipts. Unlike federal taxable income, gross receipts are not reduced by the cost of goods sold, employee salaries, rent, utilities, or other operating expenses.

However, certain types of income are excluded from the CAT base:

• Bad debts (amounts owed to you that you cannot collect)
• Transactions conducted entirely outside Ohio
• Income from certain investments or financial activities (rules vary by entity type and transaction)
• Sales tax collected and remitted to Ohio
• Certain intercompany transactions (if you have related entities)

Determining what counts as taxable gross receipts is technical and varies significantly by industry. A manufacturing business, a professional services firm, a retailer, and a software-as-a-service company calculate their taxable receipts differently. If you are uncertain whether a specific revenue stream is included, or if your gross receipts are near the $6 million threshold, consult with a certified public accountant or Ohio tax attorney before the 30-day registration window closes.

When to Register: The 30-Day Requirement

You must register for the Ohio CAT with the Ohio Tax Commissioner within 30 days after your gross receipts first exceed the $6 million exclusion threshold. This is a hard deadline, and missing it triggers substantial penalties.

The 30-day window starts on the day after your gross receipts exceed $6 million. For example, if you first exceed $6 million on June 15, you must complete your CAT registration by July 15. Registration must be completed online through the Ohio Business Gateway, which is the state's centralized system for business tax accounts.

To register, you will need to provide information about your business, including your legal entity type (LLC, corporation, sole proprietorship, etc.), the nature of your business activities, your principal place of business in Ohio, and the date your gross receipts exceeded $6 million. The registration process is straightforward, but you must do it within the window to avoid penalties.

Ohio CAT Registration Fees and Late Registration Penalties

The initial CAT registration fee is $20. However, the Department of Taxation deducts this fee from your first CAT payment, so you do not pay it separately.

If you register late (after the 30-day window expires), the penalty is $100 per month or part of a month, up to a maximum of $1,000. This penalty is strict:

• Up to one month late: $100 penalty
• More than one month and up to two months late: $200 penalty
• More than two months and up to three months late: $300 penalty
• Each additional month or part of a month adds $100, up to the $1,000 cap (reached after ten months)

The Ohio Tax Commissioner has discretion to abate (forgive) late registration penalties if you demonstrate reasonable cause for the delay, such as a genuine administrative error or circumstances beyond your control. However, you should not rely on abatement; register on time. Late penalties are in addition to any interest charged on late tax payments.

How to Register and File Your CAT Returns

CAT registration and filing both happen through the Ohio Business Gateway, an online portal operated by the Ohio Department of Taxation. You access the Ohio Business Gateway through the Ohio Department of Taxation website at https://tax.ohio.gov/. The portal is called OH|TAX eServices in some Ohio Department communications.

To register for the CAT:

1. Visit https://tax.ohio.gov/ and locate the Ohio Business Gateway link
2. Create an online account if you do not already have one
3. Log in and select the option to register for the Commercial Activity Tax
4. Provide your business details, including the date your gross receipts exceeded $6 million
5. Submit your registration

Once your registration is accepted, the Ohio Department of Taxation will assign you a CAT account number. Use this number on all CAT returns, correspondence, and payments to the state.

Filing CAT Returns and Making Payments

After you register, you must file CAT returns on a schedule determined by your gross receipts. The Ohio commercial activity tax return filing frequency may be quarterly (every three months), monthly, or another frequency depending on your total receipts. You should confirm the exact filing frequency with the Ohio Department of Taxation when you complete your CAT registration.

CAT returns must be filed electronically through the Ohio Business Gateway. You will report your gross receipts for the filing period, apply the $6 million exclusion (or the portion applicable to that period), calculate your CAT at 0.26%, and remit payment. Payments are also made electronically through the portal.

CAT return deadlines are separate from federal and state income tax deadlines. If you have filed for an extension on your federal income tax return, that extension does not apply to your CAT return. The Ohio Department of Taxation enforces CAT deadlines strictly, and late payments accrue interest at the state's established rate.

Who Does Not Pay the Ohio CAT

Certain entities and income streams are exempt from the CAT:

• Entities with Ohio taxable gross receipts of $6 million or less (2026 and later)
• Financial institutions (they pay a Financial Institutions Tax instead)
• Insurance companies (they pay an insurance premiums tax instead)
• Certain nonprofit organizations and public utilities (depending on their specific activities)

If you believe your business falls into an exempt category, verify your status with the Ohio Department of Taxation in writing before assuming you do not need to register. An incorrect assumption about exemption status can result in penalties and interest.

Other Ohio Business Taxes You May Owe

The CAT is one of several taxes you may owe in Ohio depending on your business structure and location:

• Ohio sales tax: A 5.75% state rate plus county and district permissive rates (total ranges from 5.75% to over 8% in some counties) on taxable goods and services. You need a vendor's license from the county.
• Local income tax: Many Ohio cities and villages impose a municipal net profit tax on business owners, separate from state income tax.
• Federal income tax: Standard federal self-employment or corporate tax depending on your entity type.
• Ohio personal income tax: On business owners' net profit, taxed at a flat 3% for business income (after a $250,000 business income deduction on the individual return), while nonbusiness income is taxed at 0% up to $26,050 and 2.75% above that for 2026.
• Workers' compensation: Mandatory coverage purchased from the Ohio Bureau of Workers' Compensation if you have employees.

This multi-layered tax structure makes it essential to consult with a qualified tax professional. A CPA or Ohio tax attorney can help you understand your complete tax obligation and structure your business in the most efficient way.

Key Dates and Deadlines for 2026

• Exclusion threshold: $6 million (effective for all 2026 tax periods)
• Registration deadline: Within 30 days of the date gross receipts first exceed $6 million
• Registration fee: $20 (deducted from first CAT payment)
• Late registration penalty: $100 per month or part thereof, up to $1,000 maximum
• CAT return filing: Quarterly or as determined by the Ohio Department of Taxation based on your receipts
• Tax rate: 0.26% on taxable gross receipts above the exclusion
• Annual minimum tax: None (eliminated starting in 2024)

Resources and Taking Action

For detailed information about the Ohio Commercial Activity Tax, visit the Ohio Department of Taxation at https://tax.ohio.gov/. The website includes the Ohio Business Gateway login, CAT frequently asked questions, return filing instructions, the full text of Ohio Revised Code Chapter 5751, and contact information for tax department representatives who can answer your questions.

If you operate a business in Ohio and your gross receipts are approaching or have exceeded $6 million, do not wait to take action. The 30-day registration window is strict and penalties are substantial. Start the registration process immediately if you believe you are required to register.

Consult with a qualified CPA or Ohio tax attorney if you are uncertain whether you owe the CAT, if your receipts are close to the $6 million threshold, or if you need help calculating your taxable gross receipts. Professional guidance now can prevent penalties, interest, and audits later.

Important Disclaimer

This content is provided for informational purposes only and is not intended as legal, tax, or accounting advice. The Ohio Commercial Activity Tax is complex, rules change, and this guide reflects the law as of October 2026 based on the Ohio Department of Taxation's published guidance and Ohio Revised Code Chapter 5751. Tax circumstances vary widely by business type, structure, and location. You should verify all information with the Ohio Department of Taxation at https://tax.ohio.gov/ or consult a qualified tax professional before making any decisions about CAT registration, filing, or payment. Neither the author nor the publisher assumes responsibility for errors, omissions, or your use of this information. Always seek professional advice for your specific situation.