CPA & Business Advisory Blog

Ohio Budget Bill Creates New Small Business Investment Tax Credit

Posted on Thursday, July 28th, 2011 by

A new small business investment tax credit is available as a part of the recently passed Ohio Budget Bill. The nonrefundable credit of 10% of a qualifying investment is available for investments in certain small business enterprises operating in Ohio. The credit is up to $1,000,000 per taxpayer or $2,000,000 for married couples filing jointly.

What businesses qualify for investment?

  • At the time of the investment, either total assets do not exceed $50,000,000, or annual sales do not exceed $10,000,000
  • Has at least 50 full-time equivalent employees in Ohio or a majority of employees in Ohio
  • Within six months of receiving the investment, the business must invest into or incur the cost for one or more of the following in an amount equal to the initial qualifying investment:

    • Tangible personal property, other than motor vehicles, used in business and located in this state
    • Motor vehicles purchased, registered, and used primarily for business purposes in this state
    • Real property located and used in business in Ohio
    • Intangible personal property used in business primarily in Ohio
    • Compensation for newly-hired or retained employees (excluding increased compensation for owners, officers, or managers) for whom the enterprise is required to withhold Ohio income tax

Is there a holding period for the investment?

The investment must be held for at least two years if made before June 30, 2013 or for five years after June 30, 2013.

What are the limits on the program?

  • A maximum total amount invested for any investor eligible for a certificate during a fiscal biennium is $10,000,000
  • A cap of $100 million in total costs to the state of Ohio during a fiscal biennium

How does an investor claim the small business investment credit?

  • The investor must obtain a small business investment certificate from the Ohio Department of Development. 
  • The Ohio Department of Development has not yet issued the application procedures for obtaining the small business investment certificate.

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