Are R&D Tax Credits Available in Ohio?
Yes. The state of Ohio provides the Research and Development (R&D) Tax Credit for tax years begin on or after January 1, 2008. The R&D Investment Tax Credit is nonrefundable against the Commercial Activity Tax ("CAT"). The state defines the Qualified Research Expenses ("QREs") the same as the federal with some difference as follows:
- The credit amount is equal to 7% of the net excess of total investment in qualifying research expenses for the taxable year and the average investment of the previous three years' QREs.
- 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.
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FEDERAL
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OHIO
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|||||
|
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 | ||
You can read more about this Ohio tax credit case study here.