Key figures
Ohio accounting
2026, with sources
- CAT exclusion (2025 and 2026)
- $6 millionOhio taxable gross receipts at or below this in a calendar year owe no CAT.
- CAT bright-line presence
- $500,000Ohio taxable gross receipts of this much create CAT nexus, even with no Ohio presence.
- Municipal net profit tax
- Set by each cityCities tax business net profits apportioned to them; rates are set by each city.
A gross receipts tax instead of an income tax
Ohio replaced its corporate franchise tax with the Commercial Activity Tax years ago, and has no state corporate income tax. The CAT is 0.26% of taxable gross receipts sitused to Ohio — receipts, not profits, so it doesn’t care whether you lose money. Receipts from services and SaaS are sitused to Ohio in proportion to where the customer receives the benefit.
The CAT has stopped mattering for most startups. From 2024 the annual minimum tax was repealed, and from 2025 the exclusion rose to $6 million: a company with $6 million or less of Ohio taxable gross receipts in the calendar year owes no CAT and can cancel its account (a final return is required). A company with $500,000 of Ohio receipts still has CAT nexus by bright line, but nexus without receipts above $6 million produces no tax.
The tax you do owe: city net profit tax
Ohio’s cities — not the state — tax business income. Municipal corporations levy an income tax on wages and on the net profits of businesses operating in them, and a corporation with an office or employees in Columbus, Cleveland or one of hundreds of other municipalities files a net profit return there, apportioning income among the cities where it works. Rates are set city by city; many are administered by RITA or a city’s own tax office.
H.B. 33 (2023) adds an automatic extra month for a business that has a six-month federal extension, so its municipal net profit return is extended seven months in all, and it cut the late-filing penalty to a one-time $25. A business can also elect to have the Ohio Department of Taxation administer its municipal net profit tax centrally instead of filing with each city.
What this means for the books
Consider a two-person Delaware C-corp that opens a small office in Columbus and bills $1.2 million of SaaS a year, a third of it to Ohio customers. It has CAT bright-line nexus (Ohio receipts over $500,000) but owes no CAT because its Ohio receipts are under the $6 million exclusion. It does owe Columbus net profit tax on the share of profits apportioned to Columbus once it is profitable, and its payroll withholds Columbus income tax from day one. The state tax line in its provision is a city tax, not a state one.
Deadlines
- Quarterly — the 10th day of the second month after the quarterCommercial Activity Tax, only once Ohio taxable gross receipts pass the $6 million exclusionCAT quarterly return
- Set by the municipality; generally the 15th day of the 4th month after year endMunicipal net profit return in each city where the company has taxable presence
The federal baseline
This page covers what Ohio adds. The federal rules underneath it apply here too.
Common questions
Does Ohio tax our profits?
Not at the state level. Ohio has no corporate income tax; it has the Commercial Activity Tax, a 0.26% tax on gross receipts sitused to Ohio. Since 2025 the first $6 million of Ohio taxable gross receipts each year is excluded, so a startup below that line owes nothing and need not keep a CAT account. What a C-corp can still owe in Ohio is municipal net profit tax to the cities where it has an office or employees.
How does Ohio show up in our tax provision?
There is no state income tax provision for Ohio because there is no state income tax. Ohio CAT, if you ever owe it, is a tax on receipts and belongs above the income tax line. Municipal net profit taxes are income taxes, so in a GAAP provision they sit with income taxes and carry their own deferred taxes, usually immaterial for a small company.
Accounting next door
- INIndiana accountingIndiana taxes C-corps at 4.9% on a single receipts factor, files separately, adds back bonus depreciation and lets 2022–2024 research costs be deducted in full.
- KYKentucky accountingKentucky taxes corporations at 5% plus a limited liability entity tax with a $175 minimum, requires unitary combined returns, apportions on single sales factor, and decouples from bonus depreciation and Section 174A.
- MIMichigan accountingMichigan taxes C-corps at 6% on a single sales factor once Michigan receipts reach $350,000, and decoupled from the federal R&D expensing change, so research costs are still amortized over five years for Michigan.
- PAPennsylvania accountingPennsylvania’s corporate net income tax is 7.49% for 2026 and falling, on separate-company returns with market-sourced services. Losses are capped as a share of income, and federal R&D expensing and bonus depreciation don’t carry through.
- WVWest Virginia accountingWest Virginia taxes corporations at 6.5% with mandatory combined reporting, a single sales factor and market-based sourcing since 2022, and conforms to federal tax changes enacted through 2025.
Founder guides on this
- US GAAPUS GAAP for early-stage startups, in plain EnglishAccrual accounting, revenue recognition (ASC 606), leases (ASC 842), stock compensation and capitalized software: what each means for a small company.
- The closeWhy startups should close their books every monthA monthly close turns a bank balance into numbers an investor, an auditor or a 409A firm will accept. What it is, and why it gets expensive to skip.
- FundraisingAudit-ready books before your Series AInvestors, lenders and auditors ask for the same things: accrual statements, reconciled accounts and support for every balance. How to be ready first.
More of the Ohio guide
- ReceivablesReceivables and sales tax in OhioSales tax registration, economic nexus, whether SaaS is taxable, and collecting from customers
- PayablesPayables and contractors in OhioPaying vendors and contractors: 1099 filing, use tax, contractor tests and withholding
- PayrollPayroll taxes and employer rules in OhioWithholding, unemployment insurance, paid leave, minimum wage and the rules on paydays
- ComplianceCompliance and filings in OhioRegistering to do business, annual reports, franchise tax and the filing calendar
- AdvisoryAdvisory: credits and decisions in OhioCredits, incentives and the decisions that are cheaper to get right the first time
Sources
Checked against each agency’s own page on . Rates and thresholds change, usually on January 1.
General information for US companies, not tax, legal or accounting advice for yours. Rules and thresholds change; confirm the specifics with a CPA or the agency before you act on them.