Ohio does not impose a corporate income tax; the Commercial Activity Tax applies instead

# Summary

Ohio does not impose a corporate income tax. A C corporation doing business in Ohio files no Ohio return measured by net income, and there is no Ohio corporate income tax rate to apply. The corporation franchise tax that once filled this role was phased out for the vast majority of businesses by Am. Sub. H.B. 66 (2005), which introduced the Commercial Activity Tax (CAT) in its place.

Two qualifications keep this determination honest:

• The CAT is real and entity-level, but it is a gross-receipts privilege tax, not an income tax. For 2025 it applies at 0.26 percent only to taxable gross receipts above a $6 million annual exclusion, filed quarterly; a business at or below the exclusion files nothing at all.
• Ohio income tax has not disappeared for everyone. Individuals remain subject to the Ohio individual income tax, so income that passes through S corporations and partnerships is still taxed at the owner level, with pass-through withholding, composite, and electing PTE returns (IT 1140, IT 4708, IT 4738) collecting it. Financial institutions pay the financial institutions tax rather than the CAT. What no longer exists is a net-income tax on the C corporation itself.

# What replaced the corporate franchise tax

The Department of Taxation's own account: the CAT "was enacted by the Ohio General Assembly in 2005 as part of House Bill 66, legislation that also gradually phased out the tangible personal property tax and corporation franchise tax for the vast majority of Ohio businesses."

The CAT's current shape comes from Am. Sub. H.B. 33 (2023), summarized in Information Release CAT 2023-01: effective for tax periods beginning on and after January 1, 2024 the annual minimum tax is eliminated; the exclusion amount rises to $3 million for 2024 and $6 million for 2025 and thereafter; taxpayers at or below the exclusion are not required to file; the 0.26 percent rate is unchanged; and only quarterly returns may be filed for periods after 2023.

The CAT reaches "persons" generally — sole proprietors, partnerships, and corporations alike — so it is not a corporate tax that survived under another name; it is a different tax base entirely, levied on Ohio taxable gross receipts rather than net income.

# Who still pays an income-based Ohio tax

The determination is about C corporations. Pass-through entities are not taxed on their own income, but their owners are: the individual income tax reaches distributive shares, and the Department administers pass-through entity withholding (IT 1140), the composite return (IT 4708), and the elective PTE-level tax (IT 4738, Ohio's SALT-cap workaround) to collect it. Financial institutions are excluded from the CAT and instead pay the financial institutions tax under R.C. Chapter 5726; insurance companies pay premiums taxes. None of these is a corporate net-income tax of general application.