Ohio State Tax Credits

More ways to save your hard-earned money from the tax man!

Ohio has some great State Tax Credit for you.

Thank you so much for checking our resource out here for your state and congratulations for taking a proactive step to paying less in taxes. For your state, we have identified the tax credits that are currently being offered to help you pay less in state taxes.

We hope this resource is helpful to you, and if there is something you feel we have missed, please let us know!

It would be completely arrogant of us to think that we know all things and if we missed something we want to know so we can vet that and help you and our other friends in the entrepreneurial community pay less in taxes! And if you found this helpful, you should check out our DIY resources inside of our Tax Savings Communities (found at www.MakeTaxesFair.com/Our-Communities).

We're also ready to help you if you want to skip the line of the DIY process and get help directly from us. To learn more about how we help our clients check out www.MakeTaxesFair.com/Get-My-Roadmap
Ohio

Ohio Opportunity Zone Investment Tax Credit (Financial Institutions)

Overview:
This nonrefundable tax credit incentivizes investments in Ohio Opportunity Zones by financial institutions. It’s based on certificates issued (or transferred) under Ohio Revised Code Section 122.84 and can offset tax liability under the Financial Institutions Tax (FIT).

Who It’s For:
Financial institutions subject to Ohio FIT (under Section 5726.02) that invest in qualified Ohio Opportunity Zone projects and hold a valid certificate issued under Section 122.84.

Four Key Highlights:

  1. Certificate-Based Credit Eligibility

    • Credit equals the amount listed on a valid Section 122.84 certificate or transferred certificate.

    • Applies to the tax year in which the investment occurred or the following year.

  2. 5-Year Carryforward Allowed

    • Unused credits may be carried forward for up to five tax years—though credits are nonrefundable.

  3. Credit Stacking Restrictions

    • Cannot claim if already used under Sections 5725.38, 5729.21, or 5747.86.

  4. Credit Application Priority

    • Credit must be claimed in the correct order, after preceding credits per Section 5726.98.

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Ohio New Markets Tax Credit (Financial Institutions)

Overview:
This nonrefundable credit incentivizes financial institutions to invest in qualified low-income community businesses (QALICBs) in Ohio through Qualified Equity Investments (QEIs), aligning with the federal New Markets Tax Credit structure.

Who It’s For:
Financial institutions subject to Ohio’s Financial Institutions Tax (FIT) that hold QEIs in certified community development entities investing in Ohio-based QALICBs.

Four Key Highlights:

  1. 39% Credit Over 7 Years

    • Claimed incrementally:

      • 5% in years 1–3

      • 6% in years 4–7

    • Based on the investment amount held on the credit allowance date.

  2. 4-Year Carryforward

    • Unused credits may be carried forward for up to 4 years—nonrefundable and only applied to tax due.

  3. Recapture Risk Mirrors Federal Program

    • If the federal NMTC is recaptured, Ohio will also recapture the state credit.

    • Misuse of investment proceeds can also trigger recapture.

  4. Strict Filing & Credit Order Requirements

    • Must follow credit application order in Section 5726.98.

    • Credits must be applied after other tax credits and require detailed documentation.

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Ohio Job Creation Tax Credit (JCTC)

Overview:
The JCTC is a refundable tax credit against Ohio’s Commercial Activity Tax (CAT), awarded to businesses creating new jobs through expansion or relocation in Ohio. It’s calculated based on state income tax withheld from newly created jobs and can last up to 15 years.

Who It’s For:
Businesses expanding or relocating in Ohio that commit to creating at least 10–25 new jobs and meeting payroll and investment benchmarks.

Four Key Highlights:

  1. Up to 75% Refundable Income Tax Credit

    • Applied to state income tax withheld from new job wages.

    • Refundable and awarded annually for up to 15 years based on performance.

  2. Flexible Entry Requirements

    • Standard: 25 new jobs + $660,000 payroll within 3 years.

    • Alternative: 10 jobs + same payroll minimum allowed under certain conditions (e.g., high unemployment counties).

  3. Must Consult with JobsOhio Before Starting

    • Businesses must not start the project before Tax Credit Authority (TCA) approval.

    • Consultation with JobsOhio is required to maintain eligibility.

  4. Ongoing Operational Commitments

    • Must maintain new and baseline payroll throughout the term.

    • Facility must remain operational for the credit term + 3 years.

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Ohio Research and Development Tax Credit (Section 5726.56)

Overview:
A nonrefundable tax credit for financial institutions in Ohio that increase their investment in qualified research expenses (QREs). Encourages innovation and R&D growth statewide.

Who It’s For:
Financial institutions subject to Ohio’s Financial Institutions Tax (FIT) that incur qualified research expenses in Ohio.

Four Key Highlights:

  1. 7% Tax Credit on Excess QREs

    • Calculated as 7% of the difference between current-year Ohio QREs and the average of the prior three years.

    • Must meet IRC Section 41 definitions for qualifying research expenses.

  2. Multi-Entity Aggregation Allowed

    • Entities in the same financial institution group can combine QREs, provided they're included in the same annual report.

    • Each entity must calculate QREs individually before aggregation.

  3. 7-Year Carryforward for Unused Credit

    • Unused credit may be carried forward for up to seven years but is nonrefundable.

  4. Strict Documentation & Audit Readiness

    • Businesses must retain QRE documentation for at least 4 years post-filing.

    • The Ohio Tax Commissioner may audit QRE claims and impose assessments for discrepancies.

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