To provide some taxpayer relief in the wake of COVID-19, Ohio is excluding forgiven PPP loan amounts from Ohio’s commercial activity tax (CAT). While generally debt forgiveness is treated as taxable gross receipts for CAT purposes under R.C. 5751.01(F), forgiven PPP loans will be specifically excluded under recently passed H.B. 481. The Ohio General Assembly modified the definition of “gross receipts” for Ohio CAT purposes to specifically exclude from the CAT base all forgiven loans that are excluded from federal gross income under §1106(i) of the CARES Act. Accordingly, the forgiveness of PPP loan principal will be excluded from the tax base for federal income tax purposes and Ohio commercial activity tax.

Any amount excluded from gross income for federal income tax purposes is similarly excluded from the Ohio CAT.