Ohio Research and Development Tax Credit Summary

The Ohio R&D Investment Tax Credit is nonrefundable against the Commercial Activity Tax. It defines Qualified Research Expenditures the same as the federal version but does have some differences. Below are some of the differences between the federal and the Ohio R&D Tax Credit:

  • The Ohio R&D Investment Tax Credit is 7% of the qualifying expenditures
  • Ohio follows Federal Alternative Simplified Calculation only which averages the prior three years of Qualified Research Expenditures as its base period
  • The Ohio R&D Investment Tax Credit can be carried forward up to seven years

Ohio R&D Tax Credit Case Study
An Ohio custom door and lock Company had never before claimed the R&D credit for the development activities employees. This project involved a four year study with a three year look back to claim credits.

The Company qualified for the federal R&D Tax Credits of $338,649 and an additional $64,859 in Ohio state R&D Investment Tax Credit.

FEDERAL
OHIO
Year
Total QREs
Credit
Total QREs
Credit
Year 4
$1,362,580
$88,568
$1,362,580
$28,651
Year 3
1,025,759
66,674
1,025,759
11,508
Year 2
965,404
96,540
965,404
13,476
Year 1
868,670
86,867
868,670
11,224
Total$4,222,413$338,649$4,222,413$64,859