Important changes to Ohio’s Commercial Activity Tax (CAT) are set to bring additional opportunities for business growth in the region. Under a bill recently signed by Governor DeWine, companies subject to the CAT will receive a significant tax break beginning in 2024. This measure could result in savings of over $15,000 in 2025 alone according to analysis by Kohrman Jackson & Krantz LLP.
From January 1, 2024, the new law will eliminate the CAT annual minimum tax. It will also increase the exclusion amount from $1.0 million to $3.0 million. The intended effect of these changes is to stimulate business growth in Ohio, by reducing the tax burden on companies operating in the state.
Whilst all businesses operating in Ohio are impacted, the changes are expected to have a particularly significant effect on smaller businesses and those realizing lower annual revenue. This is due to the increase in the the amount that can be excluded from the CAT.
The bill is seen as a proactive move by the Ohio State Government to redress the balance for businesses impacted by the recent economic turbulence. Its adoption aligns with trends in other states, where industrial growth and economic recovery are being spurred through legislation with the aim to enhance the business environment.
Under this premise, as the new Ohio’s CAT legislation takes effect in the coming years, companies, particularly smaller firms, will likely become increasingly attracted to the state. Furthermore, companies already operating in Ohio are expected to benefit from reduced tax-related operating expenses and may be better positioned to invest and expand.