InvestOhio

INVESTOHIO

Ohio Tax Savings By Investing in Ohio Businesses

If you are looking for a possible Ohio tax break, this may be an area to further investigate. InvestOhio is a new program that is just now being rolled out by the Kasich Administration that will help many Ohio businesses. To get yourself or your company involved, read on.

Background:

For the last 10 years, Ohio’s economy ranked #49 with more jobs lost than any other state, except Michigan and California. Furthermore, Ohio is in the bottom 20% of all states in population growth. Many large companies have left Ohio and many more have chosen NOT to come into Ohio in the last few years. Therefore, Ohio businesses need incentives to stay and invest in Ohio.

How It Works:

Small business is the backbone of the economy, but there has been little investment into small business in Ohio. Now, if you invest in your company, or someone else invests in your company, there may be a 10% tax credit on the Ohio IT-1040. Use the money to purchase an asset, like a vehicle or machinery, or upgrade your business, then you may qualify.

Eligible Small Businesses:

The InvestOhio program’s purpose is to put money into small businesses that meet one of the following criteria. (1) Any individual, pass-through entity or corporation that is subject to Ohio income tax may be eligible. (2) Must have at least 50% of its employees in Ohio, which means that if you are the only employee and you work in Ohio (and pay Ohio income tax), you are probably eligible. (3) If you are a non-Ohio company, but have at least 50 employees in Ohio or 50% of your employees are employed in Ohio, you may be eligible. (4) The company’s total assets may not exceed $50 million or total sales must be less than $10 million.

Timeframes and Eligible Investments:

Within six (6) months of receiving the investment, the investment must be spent on one or more of the following:

Equipment, tangible personal property or real property in Ohio
Intangible Assets- patents, copyrights, trademarks, licenses- used in Ohio
Motor Vehicles purchased and registered in Ohio for Ohio business use
Compensation for new or retrained employees, excluding owners, managers, and officers
Assets purchased with the investment must be held and used by the company from 2 to 5 years, depending on when they were purchases.

Amount of Credit and Time Held:

The total amount of credit from InvestOhio is capped at $100 million every two years, meaning the government will only allow that amount of credit each two years.

Qualifying Investments are: cash investment by an individual, trust or estate after July 1, 2011 to purchase capital stock or equity interest in an eligible small business; and that investment must be held by the investor for at least two years if the cash is used before June 30, 2013, or for five years if invested after June 30, 2013.

Caveat-Fine Print That Must Be Known:

Tax credits are non-refundable and non-transferable, which is standard. Also, credits cannot be taken until the end of the holding period (2 or 5 years) and can be carried forward for seven years after. Each investment must be approved by InvestOhio so that it can track the total amount of investments, plus make sure that the investments are eligible. If you do not receive approval and certification from InvestOhio, then no credit will be allowed. Maximum investment: $10 million per taxpayer or $20 million for married filing jointly taxpayers.

Opportunity and Benefits:

InvestOhio will promote investment in Ohio instead of sending Ohio money to companies from out of state. It is hoped that new business or outside business will be more willing to open or expand to Ohio if they see this credit as a benefit.

The expectation is that $1 billion will be invested and spent in Ohio the next two years, which means that an individual may receive a $1 million credit on a $10 million investment or a $10,000 credit for a $100,000 investment. If you buy a machine for $50,000 then you may receive a $5000 tax credit.

In conclusion, the InvestOhio is still in the final planning stages, so it may deviate slightly from the above scenario. It gives individuals and businesses an incentive to spend money in Ohio through Ohio tax breaks. Its hope is to help grow Ohio’s business base so that the Ohio economy grows. With the credits, InvestOhio plans to put 30,000 more people into the labor pool. Therefore, if you or your business is planning on a major purchase, check out InvestOhio.

For more information or questions, send an email to investohioquestions@development.ohio.gov .