Are R&D Tax Credits
Available in Ohio?
Yes. Ohio offers a Research and Development (R&D) Investment Tax Credit for tax years beginning on or after January 1, 2008. The credit is nonrefundable and applies against the Commercial Activity Tax (CAT).
Credit Highlights
Credit Rate
7% of the net excess of total investment in qualifying research expenses (QREs) over the average of the previous three years’ QREs.
Calculation Method
Ohio follows the Federal Alternative Simplified Credit (ASC) method.
Carryforward
Unused credits can be carried forward for 7 years.
Eligibility
Applies to expenses incurred in Ohio.
Ohio R&D Tax Credit Case Study
An Ohio custom door and lock company had never previously claimed the R&D credit for the development activities of its employees. This project involved a four-year study with a three-year look-back to calculate eligible credits.
The company qualified for 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 |
2024 | $1,362,580 | $88,568 | $1,362,580 | $28,651 |
2023 | $1,025,759 | $66,674 | $1,025,759 | $11,508 |
2022 | $965,404 | $96,540 | $965,404 | $13,476 |
2021 | $868,670 | $86,867 | $868,670 | $11,224 |
Total | $4,222,413 | $338,649 | $4,222,413 | $64,859 |
Federal R&D Tax Credit Summary
| Year | Total QREs | Federal Credit |
|---|---|---|
| 2024 | $1,362,580 | $88,568 |
| 2023 | $1,025,759 | $66,674 |
| 2022 | $965,404 | $96,540 |
| 2021 | $868,670 | $86,867 |
| Total | $4,222,413 | $338,649 |
Ohio R&D Tax Credit Summary
| Year | Ohio Credit |
|---|---|
| 2024 | $28,651 |
| 2023 | $11,508 |
| 2022 | $13,476 |
| 2021 | $11,224 |
| Total | $64,859 |
Criteria for Qualifying Research Activities
The four-part test below defines what counts as qualified research activities
Purpose of the Research
The activity should develop or improve a business component, such as a product, process, software, formula, technique, or invention, by enhancing functionality, performance, reliability, or quality.
Resolving Uncertainty
The work must address technical uncertainties, such as determining the optimal design, method, or approach to achieve the desired outcome. The results should not be known in advance.
Systematic Experimentation
Eligible research must follow a structured experimentation process, including trial and error, modeling, simulation, or testing alternatives to reach the intended improvement.
Technological Basis
The activity must rely on hard sciences such as engineering, physical or biological sciences, or computer science. Artistic, social science, or routine data collection work does not qualify.
Why the R&D Tax Credit Matters ?
Since 1981, the R&D Tax Credit has helped businesses save billions in federal and state taxes. The credit enables companies to hire more staff, expand R&D, invest in facilities, and drive innovation. Thousands of businesses across multiple industries take advantage of this benefit each year.