Ohio R&D Tax Credit Filing Instructions

To claim the Research and Development (R&D) tax credit in Ohio, businesses must be engaged in qualified R&D activities that align with Section 41 of the Internal Revenue Code, similar to federal guidelines. This nonrefundable credit is primarily used to offset the Ohio Commercial Activity Tax (CAT) liability. The credit amount is generally 7% of the qualified research expenses incurred in Ohio that exceed the taxpayer’s average annual qualified research expenses over the preceding three taxable years. There isn’t a separate application or pre-approval process with a state agency for this credit; instead, it is claimed directly on the business’s Ohio tax return. While the specific form isn’t always explicitly named as a standalone “R&D credit form” by the state, businesses filing their Commercial Activity Tax (CAT) return would typically claim it as part of their overall tax filing. The Ohio Department of Taxation advises that taxpayers should retain detailed records to substantiate their claim, including documentation of expenses from the current and three preceding taxable years. Any unused credit can be carried forward for up to seven years.