Ohio commercial activity tax (CAT) for 2026 and 2025: the 6 million dollar exclusion (3 million for 2024), the 0.26 percent rate, repeal of the minimum tax, bright-line presence, situsing of receipts, excluded receipts and persons, combined and consolidated groups, registration and cancellation, quarterly returns and estimates, penalties, and why P.L. 86-272 does not apply.
Applicable period 2026Written by the OpenAccountants team· Last updated Sep 25, 2026
Written by the OpenAccountants team. Written and source-checked by the OpenAccountants team from the official sources it links.
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This Guide covers the Ohio commercial activity tax (CAT), Ohio Revised Code (R.C.) Chapter 5751, for tax year 2026, with a dated section for 2025 and a short history for earlier years. The CAT is "an annual tax imposed on the privilege of doing business in Ohio". It is measured by Ohio taxable gross receipts (TGR), not by profit. It is not an income tax.
Figures are for tax year 2026. The Department states the $6 million exclusion for "tax years 2025 and forward", so the 2025 figures also apply to 2026. No change for 2026 had been published on 25 September 2026.
It does not cover:
Ohio personal income tax or the pass-through entity tax;
Ohio sales and use tax;
municipal net profit tax;
the financial institutions tax or insurance premiums taxes;
the certificate-based CAT credits in detail.
These taxes run alongside the CAT. A business can owe CAT, municipal net profit tax and, through its owners, Ohio income tax on the same activity. Sales tax it collects is excluded from its CAT receipts. Financial institutions paying the financial institutions tax and insurers paying premiums tax are excluded persons.
Who is subject, in one line (2026). A person owes CAT only if both are true for the calendar year:
it has bright-line presence in Ohio (or is otherwise required to be in a group); and
its Ohio taxable gross receipts are more than $6,000,000.
A business with $6,000,000 or less of Ohio TGR is excluded for that year. "A business must meet both the bright line presence test and the sales threshold to owe CAT" (Department CAT page).
Ask the client first
Which calendar year? The exclusion is $6,000,000 for 2025 and after, $3,000,000 for 2024, and $1,000,000 before 2024 (with a $150,000 filing threshold and an annual minimum tax). The CAT year is always the calendar year, whatever the client's fiscal year (CAT 2023-01).
Is a CAT account open now? An open account must keep filing quarterly returns, even with no tax due, until it is cancelled (Department CAT page).
Ohio contacts during the year: property in Ohio (owned at original cost; rented at eight times the net annual rent), Ohio payroll (including amounts paid to others for services performed in Ohio on the client's behalf), Ohio receipts, and the Ohio share of total property, payroll and receipts. Is the business domiciled in Ohio? (CAT 2005-02)
Receipts by type and by where the customer is: sales of goods (the ship-to address), services (where the purchaser receives the benefit), rents, royalties and licences, real property. Estimate Ohio TGR by quarter.
Non-operating receipts: interest, dividends, sales of business assets or capital assets, loan proceeds, capital contributions, litigation damages, sales tax collected, amounts received as an agent. Most are excluded.
Ownership: who owns more than 50% of the client, and what else that owner controls. Is there a common owner with other entities? At 50% and 80%? Any non-U.S. corporations? Any existing consolidated election and its start date? (Department CAT groups page)
Entity type. Nonprofits, government bodies, some public utilities, financial institutions paying the financial institutions tax, insurers paying premiums tax and certain dealers in intangibles are excluded persons (Department CAT page).
Past filings: the CAT account number, the last return filed, any unfiled quarters, notices or assessments, estimated returns used, and any credit certificates.
The method, step by step
This follows the Department's guidance; codes.ohio.gov could not be reached on 25 September 2026.
The CAT applies to all business structures: sole proprietors, partnerships, LLCs, corporations (C and S), trusts, and entities disregarded for federal income tax.
Excluded persons: nonprofit organizations; most government bodies; some public utilities (telegraph, natural gas, pipeline, water and heating companies, but not electric companies); dealers in intangibles paying the special Ohio tax; financial institutions paying the financial institutions tax; insurers paying the insurance premiums tax; certain related companies of financial institutions.
"Nonprofit" means both: organized other than for pecuniary gain, with earnings not distributable to members or private persons; and operating consistently with that organization.
Does it have nexus? The Department enforces only bright-line presence, except for a person that must be in a consolidated elected group (CAT 2005-02). Bright-line presence exists if any one of the five tests in the bright-line table under "Figures by year" is met: Ohio property, Ohio payroll, Ohio receipts, the Ohio share, or Ohio domicile.
Physical presence is not required. Once met at any time in a year, the person stays a taxpayer for the rest of that year and for the whole next calendar year.
Gather gross receipts. Gross receipts are "the total amount realized by a person, without deduction for the cost of goods sold or other expenses incurred, that contributes to the production of gross income". They include property and services received and debt transferred or forgiven as consideration (Department TGR page).
Remove excluded receipts. See "Excluded receipts" below. Deduct cash discounts taken, returns and allowances, and bad debts on receipts that were taxed in an earlier quarter.
Situs what is left. Only receipts sitused to Ohio are TGR. See "Situsing" below. "Those receipts not sitused to this state are not taxable gross receipts" (CAT 2005-17). There is no throwback of non-Ohio receipts.
Decide the taxpayer unit. With more than 50% common ownership, the members with nexus must file as a combined group, unless they elect consolidated status. A group is treated as one taxpayer with one exclusion (Department CAT groups page; CAT 2023-01).
Test the exclusion for the calendar year. If the taxpayer's (or group's) Ohio TGR for the year will be more than $6,000,000, it must register within 30 days of exceeding it and file every quarter. If TGR is $6,000,000 or less, it is not required to file. But an open account must keep filing until it is cancelled, so cancel it (CAT 2023-01).
Compute each quarter. The full $6,000,000 exclusion applies to the first quarterly return filed in the year. Any unused part carries forward to later quarters of the same calendar year only. Tax = 0.26% × (TGR for the quarter − exclusion still available). It never goes below zero (CAT 2023-01).
File and pay electronically through the Ohio Business Gateway by the 10th day of the second month after each quarter ends. See "Filing and payment".
Annual if TGR under $1 million; otherwise quarterly
"Effective for tax periods beginning on and after January 1, 2024, the CAT annual minimum tax is eliminated." The minimum tax is repealed from 2024, not from 2025.
"The CAT rate of 0.26% remains unchanged" (CAT 2023-01).
The Department's tables state the exclusion as "more than" / "or less": at exactly $6,000,000 of 2026 TGR, no CAT is due and no return is required.
Annual minimum tax, 2014 to 2023 only (CAT 2023-01)
For amending or answering notices on old periods only. The minimum tax was based on the prior year's TGR.
at any time in the calendar year; owned at original cost, rented at eight times net annual rent
Ohio payroll
at least $50,000
during the calendar year
Ohio TGR
at least $500,000
during the calendar year
Ohio share
at least 25%
of total property, payroll or gross receipts, at any time in the year
Domicile
any
individual or business domiciled in Ohio
The dollar amounts in this table have not changed since the reform. Meeting one of them does not by itself create a filing duty from 2024; the exclusion test must also be failed. Section III of CAT 2005-02 still says registration follows receipts of more than $150,000. That is the pre-2024 rule; use the 2024 and later amounts above.
Receipts are sitused under R.C. 5751.033. The subsection letters below are those given in CAT 2005-17 (2006). Confirm them on codes.ohio.gov before quoting them in a filing.
Receipt
Sitused to Ohio when
Sale of goods (tangible personal property), R.C. 5751.033(E)
the goods are received in Ohio. With a common carrier, this is where the goods are finally received after all transport, if the seller knows that place at the time of sale. Goods shipped outside Ohio are not TGR, even if they leave from an Ohio warehouse.
Services (most), R.C. 5751.033(I)
in proportion to the purchaser's benefit in Ohio compared with its benefit everywhere. "The physical location where the purchaser ultimately uses or receives the benefit of what was purchased is paramount."
Rents and royalties from real property, and sales of real property, R.C. 5751.033(A) and (D)
the real property is in Ohio
Rents and royalties from tangible personal property, R.C. 5751.033(B)
to the extent the property is located or used in Ohio
Intellectual property (patents, trademarks, copyrights and similar), R.C. 5751.033(F)
by the extent of use in Ohio. If that is not known, by where the person with the right to use it actually uses it.
Transport by motor carrier
by the ratio of Ohio miles to miles everywhere
Sale or lease of motor vehicles
the vehicles have Ohio titles
Electricity
sold in Ohio
Rule 5703-29-17, as released in CAT 2005-06, adds these points for services:
The Department will accept a "reasonable, consistent, and uniform method" that is supported by the business records made when the service was provided, if used in good faith. The same method must be used for all similar services.
If the Commissioner disagrees with a reasonable method used in good faith, no penalty is imposed.
For some listed services the rule gives a fallback order. The billing address comes last. It is acceptable only in good faith, and only if the purchaser has actual operations there (not a post office box).
Confirm the current rule text for any service not listed in CAT 2005-06.
These are generally excluded from gross receipts. The Department's list is longer; check it for any industry-specific item.
Interest, except interest from credit sales. Interest on a savings account is excluded. A monthly interest charge on a retail installment contract is taxable.
Dividends and distributions from a corporation, and distributive or proportionate shares from a pass-through entity or partnership.
Sales of IRC section 1221 or 1231 assets (capital assets and assets used in the trade or business). The whole receipt is excluded, "regardless of whether the taxpayer recognizes a ga[in]". Inventory is not excluded. On a sale of a whole business, split the price: the equipment part is excluded, the inventory part is taxable.
Principal repaid on loans, bonds, mutual funds, certificates of deposit or marketable instruments; amounts received under a repurchase agreement or as a loan.
The taxpayer's own stock, options or warrants issued, and sales of treasury stock.
Capital contributions, gifts and charitable contributions.
Employee compensation reported on a W-2. This includes insurance paid for workers and participants' pension plan contributions.
Life insurance proceeds, tax refunds and CAT reimbursements between related companies.
Litigation damages, but only the part above what would have been received without the litigation. Recovered lost income is not excluded.
An agent's receipts passed to the principal. The agent's own commission or fee is taxable. A real estate broker is taxed only on the part of the fee it keeps.
Sales tax and excise taxes passed on to customers.
Motor fuel sales; certain dealer-to-dealer motor vehicle transfers.
Industry-specific items: qualifying distribution center receipts (if certified); licensed agricultural commodity handlers' sales; certain receipts of casino and sports gaming operators, horse racing permit holders, mortgage brokers and professional employer organizations; administering cancer drugs; megaproject sales; broadband grants; forgiven PPP loans.
Receipts the U.S. or Ohio constitution or federal law forbids taxing.
The CAT is a cost of doing business. It "cannot be separately billed or invoiced to another person" to recover it (Department CAT page).
Common owner and the control test. A common owner owns more than half of another entity, or holds majority control, directly or through related interests. It must also be able to direct the entities below it through voting power. Individuals, trusts and estates can be common owners. A common owner without Ohio nexus still counts.
Combined group (the default).
Who: entities with more than 50% common ownership that have not elected consolidation.
Only members with Ohio nexus are included.
Receipts between members are not excluded.
One exclusion for the whole group.
Consolidated elected group (optional).
Who: entities with at least 50% common ownership may elect. The group chooses the 50% or the 80% test.
All entities that meet the chosen test must be included, even those with no Ohio nexus and those that are excluded persons.
The group chooses whether to include non-U.S. corporations. That choice is also binding for eight quarters.
Intermember receipts are excluded, and are ignored when testing the exclusion.
The election is made on forms CAT ES and CAT AR.
It binds for eight calendar quarters (two years) and renews automatically unless cancelled before the renewal date.
The reporting entity must be able to bind all members.
An entity cannot be in both a consolidated and a combined group. Entities owned more than 50% but less than 80% under an 80% election must still register as a combined group.
Groups under the exclusion, from 2024 (Rule 5703-29-04, CAT 2005-03):
A registered consolidated group whose TGR will not exceed the exclusion for the calendar year may cancel its account, "notwithstanding the binding eight-calendar quarters".
A group that would be a combined taxpayer need not register if its TGR would not exceed the exclusion after a valid consolidated election excluding intermember receipts.
A combined group registers within 30 days of TGR exceeding the exclusion.
Request to file separately (CAT RTFS, Rule 5703-29-08). A combined group member may ask to file alone only if all of these apply:
it takes no exclusion at all (neither its own nor any of the group's);
it pays 0.26% on all its TGR;
it is financially sound;
it stays jointly and severally liable for the group's tax.
P.L. 86-272 protects only against a "net income tax", defined as "any tax imposed on, or measured by, net income".
The CAT is measured by gross receipts, without deduction for cost of goods sold or other expenses. So a seller whose only Ohio activity is soliciting orders for goods is still subject to the CAT if it has bright-line presence and more than $6,000,000 of Ohio TGR.
The bright-line standard, including the $500,000 receipts test without physical presence, was upheld in Crutchfield Corp. v. Testa, 151 Ohio St.3d 278, 2016-Ohio-7760 (CAT 2005-02).
The CAT is a state tax "paid or accrued within the taxable year in carrying on a trade or business". It is deductible by the business under section 164(a).
How it flows to owners is for the federal Guides.
Worked cases
These use hypothetical amounts. Each is for calendar year 2026 unless it says otherwise.
A Michigan corporation sells only goods into Ohio. Its reps only solicit orders. Ohio TGR (goods received in Ohio): Q1 $2,000,000, Q2 $2,000,000, Q3 $1,500,000, Q4 $1,500,000. Total $7,000,000.
Bright-line presence: yes (at least $500,000 of Ohio TGR). Over $6,000,000: yes. P.L. 86-272 does not help.
It registers within 30 days of the point in Q4 when cumulative TGR passed $6,000,000.
HoldCo owns all of OpCo and IPCo. OpCo has $9,000,000 of Ohio TGR from outside customers. IPCo licenses trademarks that OpCo uses in Ohio and receives $2,000,000 of royalties from OpCo. That is Ohio TGR for IPCo and gives it bright-line presence. HoldCo has no receipts.
Combined (default): OpCo and IPCo file as one group. The royalty is not excluded. TGR $11,000,000. ($11,000,000 − $6,000,000) × 0.26% = $13,000.
Consolidated (80% election): all three are included. The $2,000,000 intermember royalty is excluded. TGR $9,000,000. ($9,000,000 − $6,000,000) × 0.26% = $7,800.
Separate returns with an exclusion each are not an option. A member filing alone under a request to file separately gets no exclusion.
The election binds for eight quarters. Model the next two years before electing, and look for other commonly owned entities that would have to be pulled in.
Case 4: the same receipts in 2024 and 2025 (CAT 2023-01)
Ohio TGR of $5,000,000 in each of 2024 and 2025, with bright-line presence.
2025: $5,000,000 is not more than $6,000,000, so no tax is due. If it expected this, it should have cancelled its account effective 31 December 2024. If it did not, it still had to file quarterly returns showing no tax.
An Ohio corporation has 2026 sales of $25,000,000. Of these, $10,000,000 is delivered to Ohio customers and $15,000,000 to customers in other states. It also receives $500,000 of dividends, $200,000 of interest on bank deposits, and $400,000 from selling a used press (a section 1231 asset).
Ohio TGR: $10,000,000. The out-of-state sales are not sitused to Ohio. The dividends, deposit interest and press sale are excluded.
CAT for the year: ($10,000,000 − $6,000,000) × 0.26% = $10,400, spread over the quarterly returns as the exclusion is used up.
When to refuse or refer
Before 2024 periods: amended returns or assessments with the minimum tax, the $1,000,000 exclusion or annual returns. Refer to a CAT specialist with the CAT 2023-01 history table.
Group questions: a consolidated election, cancelling one within its eight quarters, a change in ownership during the year, joint ventures, non-U.S. corporations, or a request to file separately.
Special exclusions: qualifying distribution centers, motor fuel, agricultural commodity handlers, casinos, sports gaming, horse racing, PEOs, mortgage brokers, megaprojects, disaster work.
Services without clear benefit location, or a large multistate services business near the exclusion. Situsing decides the answer.
Excluded-person status in doubt: a nonprofit with commercial activity, a utility or a financial-institution affiliate.
Unfiled years, notices or assessments. Consider the voluntary disclosure program: a three-year lookback, penalties waived, tax and interest still due (Department TGR page).
Credits, including the jobs, research and historic preservation credits. The film and theater capital improvement credit was repealed by H.B. 96 effective 30 September 2025, but credits issued earlier can still be claimed.
Any statutory point you need to cite in a dispute. The Ohio Revised Code site could not be reached for this Guide; confirm the section text there.
"Annual filing is eliminated after the 2023 annual return, which is due May 10, 2024. Only quarterly returns may be filed for tax periods beginning on and after January 1, 2024."
The switch happened for 2024. 2025 and 2026 are quarterly too.
Before 2024, taxpayers with TGR under $1 million filed annually by 10 May of the next year; others filed quarterly.
Due dates (each quarter):
Quarter
Due
1 January to 31 March
10 May
1 April to 30 June
10 August
1 July to 30 September
10 November
1 October to 31 December
10 February of the next year
When the 10th fell on a weekend, the Department has set the next business day. For example, the fourth quarter 2023 return was due 12 February 2024. For 2026, 10 May fell on a Sunday; check the Department's due dates page for the exact day.
Electronic only.
File and pay through the Ohio Business Gateway (gateway.ohio.gov).
TeleFile for the CAT was discontinued effective 31 March 2026.
To amend, file an amended return on the Gateway.
The Department's pages offer no filing extension. If the actual figures are not ready by the due date, file an estimated return (below). Other alternative reporting schedules need the Commissioner's written approval (CAT 2005-13).
Registration.
Register (form CAT 1, preferably on the Gateway) within 30 days of exceeding the exclusion for the calendar year.
You need a FEIN or, for a sole proprietor, an SSN. The account takes about 3 business days to be ready.
The "date subject" may be set up to 6 months ahead.
There is no registration fee.
Late registration: a penalty of up to $100 per month, not to exceed $1,000.
Cancellation.
Cancel through the Gateway's CAT Cancel Account transaction, or on the Business Account Update Form.
Groups use the form and must document ownership of the remaining members.
The effective date may be up to one year ahead.
A business that expects TGR at or under the exclusion for the next year should cancel effective 31 December of the current year. Its final return is then the fourth quarter return, due the following February.
A business near the exclusion may instead keep its account open, filing returns and paying nothing until it goes over.
A business that cancelled must register again, and start paying, within 30 days of going over.
Estimated returns (only if filed on time):
A rule estimate reports TGR of at least 95% of the previous quarter's TGR. The payment may never be less than 70% of the quarter's actual tax. Reconcile by the due date of the next quarter's return. It cannot be used in a calendar year in which the statutory estimate is used.
A statutory estimate is reconciled at year end. Each quarter's estimated TGR must fall between 95% and 105% of actual, or interest and penalty apply to the shortfall.
Penalties and interest.
Late filing or payment: up to 10% of the tax due or $50, whichever is greater.
Interest is charged at the certified rate for each calendar year: 8% for 2025 and 7% for 2026.
Refunds and records.
A refund claim must be filed within four years of the overpayment, on the Gateway or form CAT REF.
Keep records for four years from the later of the due date and the filing date.
2025 returns.
All four 2025 quarterly returns are due by now; the fourth quarter return was due 10 February 2026.
There is no 2025 annual return and no extension. The 15 October 2026 extended date for income tax returns does not apply to the CAT.
A 2025 quarter not yet filed is late. The penalty applies, and interest runs at 8% for days in 2025 and 7% for days in 2026.
Calendar year confirmed; exclusion for that year applied ($6,000,000 for 2025 and 2026; $3,000,000 for 2024).
Excluded-person status checked.
Bright-line presence tested on each of the five tests, including the 25% test and domicile, and the carry-over into the next year.
Gross receipts gathered; each exclusion applied with its condition (credit-sale interest, inventory, litigation excess, agent's own fee).
Every remaining receipt sitused by type; services method documented and consistent.
Group tested: common owner, control test, combined or consolidated, 50% or 80%, non-U.S. corporations, eight-quarter binding period.
Registration within 30 days of exceeding the exclusion, or cancellation filed with the right effective date.
Quarterly returns: exclusion applied to the first quarter and carried forward within the year only; tax at 0.26% of the excess.
Estimated return method chosen consistently for the year, and reconciled on time.
Filed and paid on the Gateway by each 10th day of the second month after the quarter.
Late items: penalty up to 10% or $50, interest at the year's rate; voluntary disclosure considered for unfiled years.
Not treated as an income tax: P.L. 86-272 not relied on.
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