Business  |  Entrepreneurship and Business Assistance Centers

Entrepreneurship and Business Assistance Centers » Business Bonds, Grants, Loans, and Tax Credits » Ohio Research and Development Investment Tax Credit

Ohio Research and Development Investment Tax Credit

Contact

Ohio Department of Taxation, Sales Tax Division (888)405-4039

The Ohio Research and Development Investment Tax Credit, which is authorized within Section 5751.51 of the Ohio Revised Code, is a nonrefundable credit against the Commercial Activity Tax (CAT).

In order to qualify, the taxpaying Corporation must invest in "Qualified Research Expenses", as defined in Section 41 of the Internal Revenue Code. Both in-house expenses, such as wages and supplies, and contract expenses qualify (See Section 41 of IRC for more details).

The credit equals seven percent of the amount of Qualified Research Expenses in excess of the taxpayer's average investment in Qualifying Research Expenses over the three preceding taxable years. Any excess credit not used for the taxable year in which it is earned may be carried forward for up to seven years.

Sample Calculation:
Total Investment in Qualifying Research Expenses for Taxable Year $600,000
Average Investment in Qualifying Research Expenses for three preceding Taxable Years $200,000
Net Excess of Qualifying Research Expenses for the Taxable Year $400,000
Credit Earned (7%) $28,000

There is no special application or approval process for this tax credit. The credit may be claimed on a tax return, but will be subject to audit by the Department of Taxation.