Bill decreases Ohio’s CAT

A bill that will reduce Ohio’s Commercial Activity Tax (CAT) is on its way to Gov. DeWine’s desk for signature. 

A 25% reduction in the CAT rates and annual minimums will be phased in over two years. 

Under the Senate proposal, the tax would be eliminated over the next two years for all businesses with less than $6 million in annual receipts. Businesses bigger than that would be exempt from the commercial activity tax on their first $6 million in income. 

The cuts are projected to deprive the state of $500 million in annual tax revenue. 

According to the Ohio Department of Taxation, CAT is an annual tax imposed “on the privilege of doing business in Ohio.” It’s measured by gross receipts from business activities in the state. Those earning over $150,000 per year must register for the CAT and pay the tax. 

The National Federation of Independent Businesses (NFIB) applauds the bill saying small businesses have needed this for years. 

“The CAT is essentially a privilege-of-doing business tax that makes it harder for small, independent businesses to operate in Ohio,” NFIB State Director Chris Ferruso said in an NFIB report. 

Ferruso said the COVID pandemic made it harder for businesses to stay afloat and that this reduction would help.