Ohio DOR Doubles Gross Receipts Limit for Small Businesses
The Ohio Department of Taxation (Ohio DOR) has expanded small business tax guidance as the Commercial Activity Tax (CAT) exclusion increases from $3 million to $6 million in gross receipts, effective January 1, 2025. The change removes filing and payment requirements for thousands of small businesses, forming part of the official State of Ohio’s broader initiative to simplify tax compliance and encourage business growth.
Beginning next year, Ohio businesses earning $6 million or less in gross receipts will be fully exempt from the Commercial Activity Tax. The 2025 expansion follows reforms introduced in 2024, which eliminated the minimum annual tax and raised the exclusion threshold from $150,000 to $3 million.
According to the Ohio DOR’s official documentation, businesses exceeding the $6 million limit will continue to pay a 0.26 percent tax rate on receipts above that amount. For instance, a company reporting $7 million in gross receipts would owe $2,600 in CAT for the year. Officials say this policy enables small enterprises to reallocate resources toward payroll, operations, and local investment, rather than state tax payments.
Small businesses meeting the new exclusion may cancel their CAT accounts with an effective date of December 31, 2024, but they must still file all 2024 quarterly returns. The final return for the 2024 tax year is due February 10, 2025.
The Ohio Business Gateway and Innovate Ohio platforms have launched digital tools to help taxpayers manage their accounts securely. These include cancellation request forms, status updates, and electronic filing options. The department recommends that businesses near the threshold maintain registration to avoid reapplying if future receipts exceed the limit.
“Taxpayers should carefully review their projected gross receipts for the upcoming year,” said an Ohio DOR spokesperson. “Those under the $6 million level can file cancellation requests online, while those close to it may wish to stay registered.”
Comprehensive guidance, forms, and deadlines are available through the official State of Ohio website. Information Release CAT 2023-01 provides the latest updates, and the department’s Small Business Resource Hub offers detailed assistance on registration and tax filing requirements.
The Commercial Activity Tax is the State of Ohio’s primary business privilege tax, applied to gross receipts instead of net income. Unlike federal income tax, which targets profits, the CAT is calculated on total taxable gross receipts from goods and services sold within the state.
Since its inception, the tax has undergone several reforms aimed at easing administrative burdens. The elimination of the minimum annual tax in 2024 was a significant milestone. Now, with the exclusion doubling to $6 million in 2025, state officials estimate that thousands more small businesses will be removed from mandatory filing requirements.
The Ohio DOR notes that these updates reflect the department’s ongoing modernization efforts through the Innovate Ohio platform, which improves access to official resources and streamlines digital services for taxpayers.
State officials say the expanded exclusion promotes economic growth and simplifies the process. “This change ensures that small businesses can focus on growth, hiring, and innovation instead of navigating complex forms,” said a representative from the Ohio DOR’s Business Tax Division.
Tax professionals have also applauded the update. The Ohio Society of CPAs stated that the move offers long-overdue clarity for business owners who are uncertain about their filing obligations. “Small enterprises now have a clear understanding of their status,” said a Columbus-based tax consultant. “By redefining the gross receipts threshold, the state simplifies compliance and supports reinvestment.”
Business owners across industries say the exemption will save time and reduce expenses. Restaurants, service providers, and technology firms with budgets under $6 million stand to benefit the most.
“The annual return process used to take up valuable hours and resources,” said a Dayton café owner. “Now, we can focus on growth and customer service instead of paperwork.”
The Ohio DOR urges all taxpayers to complete 2024 filings before canceling their CAT accounts. Even if a business qualifies for the 2025 exemption, it must submit and pay its 2024 returns. Companies that surpass the $6 million limit during the year must reactivate their accounts within 30 days, as required by state regulations.
The updated exclusion supports the State of Ohio’s economic strategy to attract small and midsize enterprises. Officials expect that reducing administrative burdens and eliminating certain taxes will help stimulate reinvestment in local communities.
“The new CAT policy represents one of the most substantial tax relief measures in Ohio’s recent history,” said a representative from the state’s economic development office. “It underscores our commitment to improving the business environment and supporting job creation statewide.”
Taxpayers can access authoritative information and required forms through official state platforms:
For service requests, filings, or additional questions, taxpayers can contact the Ohio DOR Business Tax Division at 1-888-722-8829 or submit inquiries through the Innovate Ohio platform.
By William Mc Lee, Editor-in-Chief & Tax Expert—Get Tax Relief Now