Ohio Incentives

Ohio Incentives

Development Financing

Ohio enacts major tax reform. Summary of Major Changes.pdf
For more complete information, visit the Ohio Tax Commissioners web site at: http://tax.ohio.gov/index.stm

Northeast Ohio
The Right Environment for Businesses to Prosper and Grow
The most frequently utilized Ohio incentive programs are listed on this page. Follow the Ohio Incentive Programs link for investment and job creation tax credits. The contact person varies by community. See our Partners USA page for contact information, additional business resources and personalized assistance. Note, some communities map also have local incentive programs.

Ohio Enterprise Zone
Business/Project - Local and state tax incentives for businesses that expand or locate in designated areas.

Rate/Terms - Up to 75% exemption in incorporated areas and up to 60% in unincorporated areas of the improved real estate or new tangible personal property tax valuation for up to 10 years. In some instances, local school board approval may be required. Additional state incentives are available through ODOD.

Eligibility - Business must finalize an Enterprise Zone Agreement prior to project initiation, agree to retain or create employment and establish, expand, renovate, or occupy a facility in an Enterprise Zone.

Fees - An application fee of $750, payable to ODOD and annual monitoring fees may apply for each year the Enterprise Zone Agreement is in effect, or required to be monitored.

Ohio Enterprise Zone Restrictions
Intrastate Relocation
Ohio businesses relocating to non-distressed based Enterprise Zones are prohibited from receiving tax exemptions without a waiver from the Director of the Ohio Department of Development. Waiver requirements include:

Business cannot physically expand at the current site to the extent necessary for the proposed project.

Market conditions such as just-in-time supply, changes in production methods, changes in special contract provisions, or ownership changes that require a relocation of the facility for it to remain viable.

Business is subject to a consolidation of two or more existing facilities and meets one of the following standards:

At least one of the facilities involved in the consolidation is not an Ohio Operation and the project would result in at least a 25% increase in the existing employment, and at least a 25% increase in the existing value of the businesses real or personal property at the site.

All of the facilities involved in the consolidation are located in Ohio and the project results in at least 25% increase in the existing Ohio employment, and at least a 50% increase in the existing values of real or personal property of the Ohio facilities involved in the relocation.

Second Enterprise Zone Agreement
A business which has previously entered into an Enterprise Zone Agreement with a local jurisdiction, but within five years of the expiration of the previous agreement, seeks to relocate all or any portion of the employment positions or assets to another project site is prohibited from entering into a new Enterprise Zone Agreement with the new local jurisdiction unless the Ohio Department of Development Director issues a waiver. The conditions necessary to justify a waiver are the same as intrastate relocations.

Community Reinvestment Areas
Business/Project - Local tax incentives for businesses that expand or locate in designated areas.

Rate/Terms - Up to 100% exemption of the improved real estate property tax valuation for up to 15 years.

Eligibility - Business must undertake new real estate investment. Terms of the exemption are established by the local legislative authority when the area is created. Community Reinvestment Areas created after July 1994 require an agreement between the local jurisdiction and all commercial/industrial business prior to project initiation which includes job creation and/or retention and may require local school board approval.

Ohio Job Creation Tax Credit
Business/Project - State and municipal tax incentives are available for businesses that expand or locate in Ohio. State guidelines regulate the type of business and project eligible for the incentive.

Rate/Terms - A business can receive a tax credit or refund against its corporate franchise tax based on the state income withheld on new, full-time employees. The amount of the tax credit can be up to 75% for up to ten years. The tax credit can exceed 75% upon recommendation of the Director of ODOD when there is an extraordinary circumstance. Municipalities can provide a similar arrangement with their local employee income taxes.

Eligibility - A five member authority, at the state level, determines eligibility and terms. Businesses must agree to create at least 25 new, full-time jobs within three years of operations. Also, the average wage of all new employees must be at least 150% of the current federal minimum wage. In addition, the business must demonstrate to the State that the tax credit is a major factor in its decision to go forward with the project. The local community must also provide financial support for the project. Note: Many communities provide financial support through the Ohio Enterprise Zone Program or Community Reinvestment Area Program. Restrictions apply for retail and service projects.

Manufacturing Machinery & Equipment Investment Tax Credit
Business/Project - A non-refundable corporate franchise or state income tax credit for a manufacturer that purchases new machinery and equipment that is located in Ohio and is used in the production or assembly of a manufactured good.

Rate/Terms - The manufacturer shall receive a 7.5% tax credit on the increase of the investment which is in excess of the three year annual average investment on machinery and equipment. A tax credit of 13.5% is available to manufacturers making investments in “Eligible Investment Areas” which are identified annually by the ODOD. The total value of the tax credit is divided equally over seven years and the manufacturer is permitted to carry forward any unused tax credit amount for up to three years.

Eligibility - Available to any Ohio manufacturing operation; corporation, partnership, limited liability company, or proprietorship. Machinery and equipment must be new to Ohio and purchased within the qualifying period. Retooling qualifies if such costs are capitalized for federal tax depreciation purposes. Restrictions apply.

Ohio's Technology Investment Tax Credit
Program offers a variety of benefits to Ohio taxpayers who invest in small, research and development and technology-oriented firms. Through this innovative program, Ohio investors may reduce their state taxes by up to 25 percent of the amount they invest in qualified, technology-based Ohio companies. The program's maximum credit of $37,500 per investment may be applied to personal income tax, corporation franchise tax, public utility excise tax or the tax on dealers in intangibles. Visit ODOD Web Site for more details.

Ohio Inventory Tax Exemption
Business/Project Overview: Provides an exemption from the personal property tax on qualifying inventory.

Rate/Terms
The exemption has been phased in by lowering the assessment rate on qualifying inventory
from 25% to 0% over a five year period.

Eligibility Inventory brought into Ohio from out of state, held for storage only with no further processing
and then distributed back outside of the state will be subject to a reduced personal tangible property assessment rate. "Held for Storage Only" is a specific standard of eligibility, which may preclude the value of some inventory being shipped directly to customers from qualifying for the reduced assessment rate.

See our Partners USA page for contact information, additional business resources and personalized assistance. Note, some communities map also have local incentive programs.

Development Financing

Last modified: November 09, 2006