Ohio taxpayers and pass-through entities can now receive a non-refundable income tax credit for qualifying investments to acquire an equity interest in a small business through a program called InvestOhio. Investors may claim up to $1 million ($2 million for married taxpayers filing jointly) through the new tax credit every two years. Any unused portion of the credit can be carried forward seven years.
InvestOhio was created as part of Ohio’s Biennial Budget Bill which was approved on June 30, 2011. The credit will be administered by the Ohio Department of Development, which may issue $100 million in credits every two years. The credits are issued on a first-come, first-served basis.
InvestOhio Key Details
Qualifying investments include the acquisition of an equity interest in a small business. The investment must be occur after July 1, 2011 and cannot include money from a grant or loan from a government entity.
Eligible investors include individuals who are subject to income tax imposed under the Ohio Revised Code, and include pass-through entities in which individuals hold a direct or indirect equity interest.
For investments made after July 1, 2011 and before July 1, 2013, the holding period is two years. However, investments made after June 30, 2013, have a holding period of five years.
A small business enterprise can include a corporation, pass-through entity, partnership, S-corp or other person that:
– Has less than $50 million in total assets or less than $10 million in total sales
– Has at least 50 full-time equivalent employees for which Ohio taxes are withheld, or have more than half of the enterprise’s total fulltime equivalent employees employed in the United States employed in Ohio
– Invests within six months of the qualifying investment an amount at least equal to the amount of the qualifying investment in Ohio-based:
- Tangible personal property
- Real property
- Intangible personal property
- Business motor vehicles purchased and licensed in Ohio
- Or compensation to new or retained employees for whom Ohio income tax is withheld (excluding increased compensation to owners, officers or managers)
For any form of investment listed above, the property must be held and used in the business or the compensation paid, from the date the property is acquired until the end of the holding period.
If you are unsure if your company qualifies for the InvestOhio Tax Credit, then contact us now! Credits are issued on a first come first serve basis so it is important to ACT NOW! For additional information please contact Joe Popp, JD, LLM at 614.889.8725, or click here to contact Joe. In a brief consultation she can assess your situation and determine if you qualify and how to take advantage of the tax credit.