By Andi Anderson
The Commercial Activity Tax (CAT) is a business tax in Ohio applied to the gross receipts of individuals and companies. It is a “privilege tax,” meaning it is charged for the right to conduct business in the state. Over the years, CAT has impacted various sectors, including agriculture.
As of 2024, changes to CAT rules offer significant relief. The tax now only applies to businesses with gross receipts over $3 million, and by 2025, that threshold increases to $6 million. Prior to 2024, businesses exceeding just $150,000 in receipts were required to pay CAT. These new thresholds have reduced the burden on farmers and small enterprises.
In addition to this, the minimum tax—which affected many small businesses and farmers—was removed in 2024. The Ohio Farm Bureau played a major role in pushing for these changes to reduce unnecessary strain on the agricultural community.
Taxable gross receipts include the total amount a business earns, without subtracting expenses or the cost of goods sold. This includes property value, service payments, and forgiven debts. However, some receipts are exempt. Interest (except credit sale interest), dividends, capital gains, wages, and gifts do not count.
For farmers, receipts from livestock used for breeding, dairy, draft, or sports (excluding chickens) are also exempt. Sales of farmland with unharvested crops are not taxable, but once crops are harvested and sold separately, those receipts are taxable.
Anyone who crosses the taxable threshold must register with the Ohio Department of Taxation within 30 days. All taxpayers must now file quarterly returns online. If a business no longer qualifies, they can deactivate their account to avoid penalties.
These changes aim to simplify the process and reduce unnecessary costs, especially for Ohio’s farming community and small businesses.
Photo Credit: ohio-farm-bureau
Categories: Ohio, Business