Ohio R&D Investment Tax Credit

Ohio R&D Investment Tax Credit

Funds Ohio manufacturers and innovators with tax credits to support qualifying innovation spending and build capacity.

Eligibility · United States · US-OH

The Ohio Research and Development Investment Tax Credit is a self-claimed, nonrefundable credit against the Commercial Activity Tax (CAT), administered by the Ohio Department of Taxation (ODT) under ORC §5751.51 and Ohio Admin. Code 5703-29-22. The credit equals 7% of the taxpayer's incremental qualified research expenses (QREs) — that is, QREs above the taxpayer's three-year rolling average — and carries forward for up to seven years against future CAT liability. No pre-certification or application process is required; the credit is computed and claimed directly on the CAT return using the applicable credit schedule, with ODT retaining audit authority over all claims. QREs are defined by reference to the federal definition under IRC §41, covering in-house wages, supplies, and 65% of payments to outside contract research firms, provided the activities are conducted within Ohio.

Eligible activities include developing or improving products, processes, techniques, formulas, or software through systematic experimentation intended to resolve technological uncertainty. The program is sector-agnostic: any entity subject to Ohio CAT with qualifying in-state research activity may claim the credit. Estimated award values range from a few thousand dollars for early-stage companies to over $1 million for larger operations with substantial incremental R&D spend, though there is no per-taxpayer statutory cap on the credit amount. As of May 2026, H.B. 756 was pending in the Ohio legislature and, if enacted, could expand the credit rate and potentially introduce a refundable component, though no changes had taken effect.

Because this credit is self-claimed rather than awarded through a competitive process, there are no application deadlines beyond the annual CAT return due date, no merit review, and no discretionary cap on total claims. Companies conducting R&D in Ohio — particularly in manufacturing prototyping, algorithm optimization, biotech process development, and similar activities — should engage an R&D tax credit specialist to document QREs in compliance with federal IRC §41 standards, as ODT audits apply the same four-part test used at the federal level.