Ohio Business Personal Property Tax: Why Ohio Has None Left and What Replaced It
Ohio Business Personal Property Tax: Why Ohio Has None Left and What Replaced It
If you are forming an Ohio business and have read that Ohio has a business personal property tax, that information is probably out of date. Ohio once taxed the machinery, equipment, furniture and inventory that businesses owned. That tax was phased out, and for most businesses it no longer applies. This guide explains what was eliminated, what is still taxed, what replaced the lost revenue, and what you need to track when you start up.
Disclaimer: This guide is informational only. It is not legal, tax or accounting advice. Tax rules change, and the details of your situation matter. Consult a qualified Ohio attorney or CPA before making decisions based on this content.
What the Tangible Personal Property Tax Covered
Ohio's tangible personal property tax applied to business assets you could physically touch and move. That included machinery, equipment, furniture, fixtures and inventory. Businesses listed these assets for the county and paid tax on their value, so every significant purchase added to the bill. For a small company, the tax meant tracking and reporting its equipment as well as its sales.
How House Bill 66 Phased It Out
In 2005, the General Assembly passed House Bill 66 (H.B. 66), which phased out the tangible personal property tax on general business machinery, equipment, furniture and inventory. The rates came down over several years until they reached zero for tax year 2009. That made 2009 the first year in 163 years that most businesses in Ohio owed no such tax.
Telephone and inter-exchange companies were phased out on a later schedule and reached zero for tax year 2011.
In practice, if you are starting a typical Ohio business, you do not owe a personal property tax on the computers, desks, tools, shelving or inventory you buy. A purchase like that does not trigger a property tax return. The table below shows where each piece of the old system stands today.
| Tax or charge | What it covers | Current status |
|---|---|---|
| General business tangible personal property tax | Machinery, equipment, furniture and inventory of most businesses | Rates reached zero for tax year 2009 |
| Telephone and inter-exchange company property tax | Property of telephone and inter-exchange companies | Rates reached zero for tax year 2011 |
| Public utility tangible personal property tax | Electric, gas, pipeline, water works and similar utility property | Still taxed under Ohio Revised Code Chapter 5727 |
| Commercial Activity Tax (CAT) | Ohio taxable gross receipts | 0.26% (.0026) above the $6 million exclusion for tax year 2025 and later |
| Real property tax | Land and buildings | Still applies, with valuation by the county auditor and local levies |
The One Category Still Taxed: Public Utility Property
Public utility tangible personal property is still taxed. This covers property owned by electric, gas, pipeline and water works companies and similar utilities. The tax is governed by Ohio Revised Code Chapter 5727, and the Ohio Department of Taxation administers it. If your business is an ordinary operating company and not a regulated utility, this rule almost certainly does not apply to you. If you are unsure, confirm with the Department of Taxation before you assume either way.
What Replaced the Revenue: The Commercial Activity Tax
Ohio has no corporate income tax, no franchise tax and no LLC annual tax. The main business-level tax is the Commercial Activity Tax (CAT). The CAT is a gross receipts tax, not a property tax. It is based on what your business brings in, not on what it owns.
The CAT rate is 0.26% (.0026) of Ohio taxable gross receipts. For tax year 2025 and later, the first $6 million is excluded, so only gross receipts above that amount are taxed. Only businesses with more than $6 million of Ohio taxable gross receipts owe the CAT or must register. The CAT has had no annual minimum tax since 2024, and CAT returns are filed quarterly.
Financial institutions pay the Financial Institutions Tax instead of the CAT, and insurance companies pay the insurance premiums tax. Those rules are separate from the one most startups will face.
Real Property Tax Still Applies
Ohio still taxes land and buildings. If your business owns real estate, the county auditor values the property, and local levies set the rate. This is a property tax on real property, which is entirely separate from the old personal property tax on equipment and inventory. If you lease your space, the owner pays the real property tax, although your lease may pass some of that cost to you.
Myth Check: No Personal Property Return for Ordinary Equipment
Many online articles still describe a business personal property tax return as a standard startup task. For ordinary business equipment, that is out of date. Ohio businesses do not file personal property tax returns for ordinary equipment, machinery, furniture or inventory.
Your actual filing obligations are different. You may need a CAT registration if you cross the $6 million threshold. You need a vendor's license before making taxable sales. You also file the income tax return that applies to your business structure, and your accountant will tell you which one.
What to Track: Asset Records
Ohio no longer taxes your equipment, but your asset records still matter. Depreciation is a deduction on your income tax returns, and you cannot claim it without records. Keep a dated list of each significant purchase with its cost, the date you bought it and a short description. Keep receipts and invoices with the list. Ask your CPA how depreciation applies to your situation, since the rules for federal and Ohio income tax can differ.
Startup Costs That Remain
Because the personal property tax is gone, your startup budget centers on other items. These are the verified figures for the most common steps:
- Articles of Organization for a domestic LLC (Form 610): $99 filing fee with the Ohio Secretary of State. Regular service takes 3 to 7 business days from receipt. Filing through Ohio Business Central is the fastest standard route.
- Name reservation: $39, which holds a name for 180 days.
- Trade name or fictitious name registration (Form 534A): $39. Trade names are registered with the Secretary of State, not the county.
- Sales tax vendor's license: $50 application fee for a county vendor's license, as of April 9, 2025. You apply through the Ohio Business Gateway or the county auditor. Counties issue no general business license. The county auditor issues this vendor's license under a state statute.
- Annual report: None for Ohio LLCs or for-profit corporations.
- Workers' compensation: Coverage is purchased from the state BWC fund.
- City or village income tax: Cities and villages tax business net profit under their own rates. Confirm the rate that applies to your location with your municipality.
Ohio has no state general business license and no statewide general contractor license. Some trades and professions do require state-issued licenses, so confirm which ones apply to your business with the agency that regulates your field.
Frequently Asked Questions
Does Ohio have any business personal property tax at all?
Yes, but only for public utility property such as electric, gas, pipeline and water works companies. Ordinary businesses do not owe it on their equipment, machinery, furniture or inventory.
Do I need a vendor's license before I start selling?
If you sell taxable goods or services in Ohio, you must obtain a vendor's license before making taxable sales. The application fee is $50 for a county vendor's license. Your sales tax obligations depend on what you sell, so confirm the details with the Ohio Department of Taxation.
Who should I ask about depreciation and asset records?
A qualified CPA is the right person for depreciation questions. Income tax treatment depends on your business structure, your asset purchases and your overall tax position, and the answer for one business may not fit another.
Where to Confirm Details
Rules and rates change, so verify the current figures before you rely on them. Start with these official sources:
- Ohio Secretary of State: ohiosos.gov for business forms and filing information.
- Ohio Business Central: ohiobusinesscentral.gov for online filings.
- Ohio Secretary of State business records search: businesssearch.ohiosos.gov to check whether a name is already in use.
- Ohio Department of Taxation: tax.ohio.gov for the CAT, public utility property and other business taxes.
- Vendor licensing: Ohio vendor licensing page for sales tax registration.
If your business is a public utility, has more than $6 million in Ohio taxable gross receipts, or holds significant depreciable assets, consult a qualified CPA or Ohio attorney before filing. This guide cannot replace advice tailored to your facts.