The tax landscape for Ohio construction companies continues to undergo a significant transformation, driven by legislative reforms and broader economic shifts. The digitalization of commerce, evolving state tax policies, and global sustainability initiatives are reshaping compliance obligations. Drawing on recent analyses, this article explores key tax developments and offers strategic guidance for Ohio construction firms to thrive in today’s dynamic environment.
Ohio’s Tax Reforms: A Focus on Simplification
Ohio’s recent tax reforms, notably through House Bill 33 (2023), aim to reduce compliance burdens for businesses, particularly smaller construction companies. The Commercial Activity Tax (CAT) has seen significant changes: the $150 annual minimum tax was eliminated in 2024, and the gross receipts exclusion threshold increased from $3 million in 2024 to $6 million in 2025. This means businesses with Ohio-sourced receipts below $6 million are exempt from CAT filing and payments, potentially relieving nearly 90% of Ohio-based businesses from this obligation. Additionally, annual CAT filings have been replaced with quarterly filings for those still subject to the tax, aligning with operational cycles but requiring updated compliance processes.
Navigating Sales & Use Tax Challenges
Ohio’s sales and use tax (SUT) remains a critical concern for construction firms, touching everything from nexus rules to digital services. Since the Wayfair decision, any company that sells more than $100,000 or completes more than 200 transactions in Ohio must register and collect SUT, even if it operates remotely or through digital platforms. Once registered, firms face a statewide base rate of 5.75%, plus local levies of up to 2.25%, on most construction materials and services.
Fortunately, Ohio does carve out exemptions for qualifying projects: materials used in public infrastructure or exempt entities such as schools can be purchased tax-free. On the other hand, the rise of digital tools, project management software, design applications, and other cloud-based services has introduced a new layer of complexity since many of these solutions are subject to SUT.
Construction companies should review their sourcing rules carefully and explore automation solutions to manage all these moving parts, nexus thresholds, rate calculations, exemption tracking, and digital-service taxation. By integrating SUT-specific calculation and reporting tools, firms can reduce manual effort, avoid compliance gaps, and capture every available tax savings opportunity.
Sustainability & Federal Tax Implications
The federal Inflation Reduction Act (IRA) of 2022 has spurred significant clean energy investments in Ohio, creating more than 14,000 jobs in construction and manufacturing. However, proposed rollbacks of IRA tax credits, as outlined in a May 2025 House budget proposal, threaten these gains. The potential phase-out of credits for electric vehicles and energy-efficient retrofits by 2031 could impact construction projects tied to sustainable infrastructure. Ohio firms benefiting from IRA-funded projects, such as Honda’s $4.4 billion EV expansion, should monitor these developments closely and advocate for preserving incentives that support green construction.
Strategic Compliance in 2025
To thrive in today’s evolving tax landscape, Ohio construction companies should embrace data integration and automation. The right tools and advisors can help you manage your company’s tax data from ERP systems, enhancing accuracy and reducing risks. Regular audits of nexus-triggering activities and proactive tax planning can uncover exemptions and optimize strategies. As Ohio refines its tax code and global trends reshape compliance, partnering with experts is essential. Contact your GBQ advisor or a member of GBQ’s State and Local Tax team to navigate the complex state and local tax environment, ensuring your firm is well-positioned to build a sustainable future.
Looking for more state and local tax insights? Check out these resources:
Is Your Business Benefiting From This State Tax Strategy?
Don’t Overlook Your Property Tax
