Ohio Research and Development Credit

At a glance

• Jurisdiction: Ohio (OH)
• Credit name: Credit for qualified research expenses (often called the Ohio R&D investment tax credit), against the Commercial Activity Tax (Ohio Rev. Code §5751.51; Ohio Adm. Code 5703-29-22)
• Administering agency: Ohio Department of Taxation
• Rate(s) and base: 7% of Ohio QREs (as defined in IRC §41) for the calendar year above the average annual Ohio QREs for the three preceding calendar years.
• Refundable? No. It is a nonrefundable credit that applies only against the Commercial Activity Tax (CAT).
• Transferable? No.
• Carryforward: 7 years.
• Annual cap / proration: No statewide cap.
• Pre-approval / application and deadline: None. Annual CAT filing ended starting with tax year 2024, so all CAT taxpayers now file quarterly and first claim the credit on the fourth-quarter return due February 10 after the calendar year in which the expenses were incurred.
• Forms: Claim the credit on the CAT return (Ohio Business Gateway) with the commissioner's credit schedule. The credit is denied until the schedule is provided.
• Sunset / recent changes: No sunset. Since 2025, taxpayers with Ohio taxable gross receipts of $6 million or less are excluded from the CAT ($3 million in 2024), so many smaller research companies have no CAT to offset. HB 756 (introduced March 11, 2026) would extend the credit to Ohio income tax. It is in the House Ways and Means Committee and has not been enacted.

What it is

Ohio's research credit offsets only the Commercial Activity Tax, a tax on gross receipts. It is 7% of the increase in Ohio QREs over the prior three-year average, and unused credit carries forward 7 years. Ohio has no research credit against personal income tax.

Who can claim it

• Taxpayers subject to the CAT that incur QREs in Ohio. For consolidated or combined groups, only members of the group on December 31 of the calendar year count.
• In practice, the taxpayer must have CAT liability above the exclusion, meaning Ohio taxable gross receipts above $6 million in 2025 and later.
• The credit cannot reduce the CAT annual minimum tax for years in which that tax still applies. The annual minimum tax ended after 2023.

How it is calculated

1. Determine Ohio QREs for the calendar year (not the federal tax year), using IRC §41 definitions.
2. Subtract the average annual Ohio QREs for the three preceding calendar years.
3. Multiply the excess by 7%.
4. Apply the credit in the order required by §5751.98. Carry any excess forward up to 7 years. Carryforwards are used before credits generated in later years.

How to claim it

• Claim the credit on the fourth-quarter CAT return due February 10 after the calendar year. (Annual CAT returns, formerly due May 10, were eliminated starting with tax year 2024; all CAT accounts now file quarterly.)
• Complete the credit schedule (entity name, address, CAT account number, FEIN and credit amount).
• Keep QRE workpapers on a calendar-year basis for the current year and the three prior years.

Recent changes

• HB 33 (135th General Assembly, 2023): raised the CAT exclusion to $3 million for 2024 and $6 million for 2025 and later, eliminated the annual minimum tax starting in 2024, and ended annual CAT filing starting with tax year 2024 (all accounts now file quarterly). The §5751.51 text was amended effective October 3, 2023.
• HB 756 (136th General Assembly): would allow the 7% credit against Ohio income tax. It was introduced March 11, 2026 and referred to House Ways and Means on March 18, 2026. The Legislative Service Commission issued a fiscal note on the as-introduced bill in June 2026. There has been no committee vote or further action.

Likely examiner questions

These questions illustrate what an examiner may ask about this credit. They are drafts for illustration and should be reviewed by a specialist before use. Most state claims also face standard questions: where the research was physically performed, how wages, supplies and contract research were apportioned between Ohio and other locations, how Ohio amounts reconcile to federal Form 6765, the Ohio credit and carryforward schedule for each year claimed, and whether the claiming entity is the one subject to Ohio tax.

• Are QREs measured on a calendar-year basis, and do they tie to federal Form 6765 workpapers?
• How were Ohio QREs separated from QREs in other states?
• What were the Ohio QREs for each of the three prior calendar years?
• For combined or consolidated groups: were only members on December 31 included?
• Does the carryforward schedule show the origin year and expiration of each credit?
• Was the credit schedule filed with the return?

Common weak spots

• Using federal tax-year QREs instead of calendar-year QREs.
• Claiming the credit when receipts are below the CAT exclusion, or against a nonexistent liability.
• Including group members that were not in the group on December 31.
• Claiming carryforwards older than 7 years.
• Assuming the credit applies to Ohio income tax.

Next steps

• Run a mock audit for Ohio
• Official source: Ohio Department of Taxation, commercial activity tax (opens in a new tab)
• Run the eligibility checker
• Book a scoping call with Swanson Reed (opens Swanson Reed's booking calendar in a new tab)
• Contact us: +1 (469) 206-4335 or hello@creditarmor.ai

Important

This page is general information, not tax advice. Rules change; confirm current requirements with the state revenue agency or a qualified tax professional. creditARMOR is a free service. Passing this mock audit does not guarantee that your claim will pass an IRS or state examination. If needed, Swanson Reed can assist you with representation before the IRS. creditARMOR and TaxTrex are products of Swanson Reed.