Ohio does not have a traditional corporate income tax. Instead it has the Commercial Activity Tax, usually called the CAT, which is a tax on gross receipts rather than profit. For years it reached almost every Ohio business with meaningful sales, including many small businesses that paid a minimum tax just to keep their account open.
That changed. If you run a small business in Greater Cleveland, there is a good chance you no longer owe the CAT at all, and a real chance you are still getting notices for returns you do not need to file. I am Josh Katz, a CPA in Beachwood, and this is the question I get most often from local owners about Ohio business tax. Here is the current picture for 2026, who still files, what it costs, and how to close an account you no longer need.
The short version
- The first $6 million of Ohio taxable gross receipts each calendar year is excluded. Most small businesses owe nothing.
- Above $6 million, the rate is 0.26% (2.6 mills) on the excess.
- There is no annual minimum tax and no annual return; businesses that still owe the tax file quarterly.
- If your receipts are below $6 million and your CAT account is still open, you must either keep filing zero returns every quarter or cancel the account. Ignoring the notices is the expensive option.
What changed in 2024 and 2025
Ohio’s budget bill, House Bill 33, overhauled the CAT:
The annual minimum tax was eliminated starting with 2024. Businesses no longer pay a fee simply for having a CAT account.
The exclusion went up sharply. The first $3 million of Ohio taxable gross receipts was excluded for 2024, and the first $6 million is excluded for 2025 and every year after, including 2026.
Annual filing was discontinued. Businesses that still owe the tax now file quarterly. The old TeleFile option for annual returns is being retired as of March 31, 2026.
The rate itself did not change. It is still 0.26%, applied only to Ohio taxable gross receipts above the $6 million exclusion.
Do you still need to file?
If your business has $6 million or less in Ohio taxable gross receipts for the year, you owe no CAT. Whether you need to file depends on whether your account is still active: an open account has to file a quarterly return even when the tax is zero, which is why so many small businesses are still receiving delinquency notices. The fix is to cancel the account, covered below.
If you are above $6 million, you register (or keep your registration), file quarterly, and pay 0.26% on the amount over the exclusion.
A worked example
A Solon distributor has $7.5 million in Ohio taxable gross receipts in 2026. The first $6 million is excluded. The remaining $1.5 million is taxed at 0.26%, so the CAT for the year is $3,900. The exclusion is applied as the year goes along: no tax is due on the first-quarter return if receipts through March are under $6 million, and the tax starts in the quarter the business crosses the line.
A Beachwood dental practice with $2.1 million in collections owes nothing and, once its account is cancelled, files nothing.
The 2026 filing calendar
| Quarter | Receipts for | Return and payment due |
|---|---|---|
| Q1 2026 | January to March | May 11, 2026 (May 10 is a Sunday) |
| Q2 2026 | April to June | August 10, 2026 |
| Q3 2026 | July to September | November 10, 2026 |
| Q4 2026 | October to December | February 10, 2027 |
Returns are filed and paid through the Ohio Business Gateway. A deadline that falls on a weekend or holiday moves to the next business day.
What counts as Ohio taxable gross receipts
The CAT is broad. It reaches the total amount realized from sales of goods and services, rents, and most other business income, before any deduction for cost of goods sold or expenses. A few things are carved out: receipts sitused outside Ohio (goods shipped to customers in other states, services whose benefit is received outside Ohio), interest and dividends other than from credit sales, capital gains on the sale of assets, and sales tax collected and remitted. For a Cleveland business selling mostly to Ohio customers, taxable gross receipts and top-line revenue are usually close to the same number, and that is the figure to measure against $6 million.
Groups, affiliates, and the $6 million test
The exclusion applies once per taxpayer, and related businesses are often treated as one taxpayer. Companies under common ownership of more than 50% generally file as a combined group, and can elect to file as a consolidated group (at 50% or 80% ownership) to exclude sales between members. Either way, the $6 million exclusion is shared across the group, not multiplied by the number of entities. An owner with three operating companies at $2.5 million each is over the line as a group even though no single company is.
Out-of-state businesses selling into Ohio
A business with no Ohio location can still owe the CAT under Ohio’s bright-line nexus rules, which are met with $500,000 or more of Ohio receipts in a year (or $50,000 of Ohio property or payroll, or 25% of total property, payroll, or receipts in Ohio). Clearing the nexus line does not create tax by itself; the $6 million exclusion still applies. It means a remote seller with, say, $8 million of sales to Ohio customers must register and pay on the $2 million above the exclusion.
How to cancel a CAT account you no longer need
- Confirm that Ohio taxable gross receipts for the business, and for any combined group it belongs to, will stay at or below $6 million.
- File any quarterly returns that are still outstanding, even if they are zero returns, so the account is current.
- Cancel through the Ohio Business Gateway using the CAT Cancel Account transaction, or check the final-return box on the last quarterly return, entering the effective date of cancellation.
- Keep the confirmation. If receipts later climb above $6 million, re-register within 30 days of crossing the line.
If you have already received delinquency notices for quarters you did not file, respond rather than ignoring them: file the zero returns, then cancel. Penalties for unfiled returns can be abated in many cases when no tax was due, but only if someone asks.
Mistakes I see most often
- Leaving the account open after revenue drops below the threshold, then accumulating notices and penalties for unfiled zero returns.
- Measuring the $6 million against net income or against a single entity when the group as a whole is what counts.
- Including out-of-state sales in Ohio receipts (overpaying) or, more often, assuming that online sales to Ohio customers do not count (underpaying).
- Forgetting that the CAT is separate from municipal income tax. A business under the CAT threshold still owes RITA or CCA net profit tax on its income.
Frequently asked questions
Is the Ohio CAT going away?
No. The 2023 changes narrowed it to larger businesses but kept it in place. There is no scheduled repeal for 2026.
My business has $4 million in revenue. Do I file anything?
If your CAT account is cancelled, no. If it is still open, you must file quarterly zero returns until you cancel it.
Does the CAT replace income tax?
Only at the state corporate level. Ohio has no corporate income tax, but owners of pass-through businesses still pay Ohio individual income tax on their share of the profit, and every business still deals with municipal income tax.
Is the CAT deductible?
Yes. It is an ordinary business expense for federal purposes.
Need help with the CAT, or with closing an old account?
Sorting out an old CAT account is usually a one-time project, and for bookkeeping clients I track the threshold as part of the monthly work so there are no surprises. Call (216) 249-6013 or use the contact form. See also bookkeeping services in Cleveland and tax preparation.
