General Business Taxes
State of Ohio Taxes
Commercial Activities Tax (CAT)
Tax on Ohio Gross Receipts (OGR)
• OGR < $150,000, CAT=$0
• OGR > $150,000 but < $1,000,000, CAT=$150
• OGR > $1,000,000, CAT=$150 + .26% of amount over $1,000,000
The commercial activity tax (CAT) is an annual business privilege tax measured by gross receipts from business activities in Ohio. This tax applies to all types of businesses: e.g., retailers, service providers (such as lawyers, accountants, and doctors), manufacturers, and other types of businesses.
The CAT also applies whether the business is located in this state or is located outside of this state if the taxpayer has enough business contacts with Ohio. The CAT applies to all entities regardless of form, (e.g., sole proprietorships, partnerships, LLCs, and all types of corporations). Businesses with Ohio taxable gross receipts of $150,000 or more per calendar year must register for the CAT, file all the applicable returns, and make all corresponding payments. The tax does have limited exclusions for certain types of businesses, such as financial institutions, dealers in intangibles, insurance companies and some public utilities if those businesses pay specific other Ohio taxes.
Gross receipts subject to CAT are broadly defined to include most business types of receipts from the sale of goods and property or realized in the performance of a service. The following are some examples of receipts that are not subject to the CAT: interest (other than from installment sales), dividends, capital gains, wages reported on a W-2, or gifts. In general, for the sale of goods and property, such receipt is only considered a taxable gross receipt if the property is delivered to a location in this state. For services, the receipt is sitused (sourced) to Ohio in the proportion that the purchaser's benefit in this state bears to the purchaser's benefit everywhere. The physical location where the purchaser ultimately uses or receives the benefit of what was purchased is paramount in making this determination.
Taxpayers having over $150,000 in taxable gross receipts sitused to Ohio for the calendar year are required to register for the CAT. Registration is available online through the Ohio Business Gateway.
Annual CAT taxpayers (taxpayers with taxable gross receipts of more than $150,000 but less than $1 million) must pay an annual minimum tax of $150 per year. Taxpayers with taxable gross receipts over $1 million are required to file and pay quarterly. Quarterly taxpayers are required to file online through the Ohio Business Gateway. Quarterly taxpayers owe the $150 annual minimum tax for receipts up to $1 million. In addition, quarterly taxpayers pay a rate component equal to 0.26% for taxable gross receipts in excess of $1 million.
Taxpayers made up of multiple entities have the ability to file consolidated or combined CAT returns. A tax professional will need to analyze the scenarios on a case-by-case basis to determine which method provides the greatest tax savings to the company.
For more information on the CAT, visit the Ohio Department of Development.
Sales & Use Tax
The Sales & Use Tax for Butler County is 6.25%.
The Ohio sales and use tax applies to the retail sale, lease, and rental of tangible personal property as well as the sale of selected services in Ohio. The Ohio use tax applies to the storage, use, or consumption of tangible personal property in Ohio - or the receipt of the benefit of selected services in Ohio - if sales tax was not paid to the vendor or seller. The state sales and use tax rate is 5.5 percent. Counties and regional transit authorities may levy additional sales and use taxes.
A taxable sale includes any transaction in which title or possession of tangible personal property or the benefit of certain services is, or will be, transferred or provided for a price. All retail sales are subject to the tax unless they are specifically excepted or exempted in Ohio's sales tax law.
For more information on the services subject to Sales Tax in Ohio and those sales are exempted/excepted from Sales Tax in Ohio, visit the Ohio Department of Taxation.
Municipal Income/Earnings Tax
The City of Hamilton collects a 2% income tax on earnings in the City of Hamilton.
Collection of municipal income/earnings taxes are in accordance with Ohio Revised Code (ORC) Section 718 and its parts.
Corporate income tax in the City of Hamilton is based a proportional share of net profit from the business, in proportion to percentage of the following three factors in comparison to total business operations and as defined in ORC Section 718.02: gross receipts/sales, wages/employment, and property (real and tangible personal).
Real Property Tax
Real Property in the State of Ohio is tax at 35% of the appraised value of the property. By definition, real property is land, buildings and improvements to property. All real property in the State, used for residential, agricultural, commercial and industrial purposes is taxed. The county auditor in each respective county is responsible for appraising all parcels in the county every six years, with an update every three years.
Property taxes are made up of several components. School districts make up the greatest portion of millage collected by property taxes. Counties and various levies (metroparks, library, mental health, MRDD, etc.) make up the next largest millage. Municipalities or townships, depending upon the location of the parcel, make up the next portion of the collected millage.
The total millage for real property collected in the City of Hamilton, Hamilton City School District is 52.044521 mills. In other words, if a commercial or industrial structure has an appraised value of $1 million, then the tax collected on that property is calculated as follows:
• Appraised value $1,000,000
• Assessment rate 35%
• Assessed value $350,000
• Tax millage 52.044521
• Total tax $18,216
Tangible Personal Property Tax
In 2005, the State of Ohio initiated an overhaul of the way the State taxes businesses. One of the most drastic changes in the State Tax Code and most beneficial to business in Ohio was the elimination, over four years, of the State Tangible Personal Property Tax.
Tangible personal property is the physical property used in general operations of manufacturing and service-based businesses. This property includes machinery, equipment, furniture, fixtures and inventory.
While tangible personal property tax was a valuable revenue source that was utilized for funding a wide variety of governmental activities, this tax was widely viewed as a disincentive to capital investment and, as a result, was considered a roadblock to increases in personal and business productivity, income growth, and job creation in Ohio.
Beginning in 2009, Ohio will assess taxes on tangible personal property at 0%, effectively eliminating the tax.
Last updated: 5/24/2012 3:49:32 PM