InvestOhio – Personal Income Tax Credit for Investors in Ohio Small Businesses
Added at the last minute, the recently enacted Ohio Budget Bill (Am. Sub. H.B. 153) included a tax credit for individuals against their Ohio personal income taxes for investments in qualifying Ohio small business enterprises. An eligible small business enterprises must have: (1) less than $50 million in total assets or less than $10 in annual sales; and (2) 50 full-time equivalent Ohio based employees, or half of all its full-time equivalent employees located in Ohio. The credit equals 10% of the qualifying investment, limited to $1 million per individual investor ($2 million for spouses filing jointly).
An eligible investor is an individual, estate or trust subject to Ohio personal income tax making a cash investment in a qualifying small business enterprise. Within six months of the investment, the small business enterprise must invest in or incur the cost of tangible personal property, motor vehicles, real property or intangible personal property used in business primarily in Ohio, or compensation for newly-hired or retained employees for whom the enterprise must withhold Ohio income tax (excluding increased compensation for owners, officers and managers). The investor may not sell or dispose of the investment until the end of the applicable holding period, which is two years for investments made between July 1, 2011 and June 30, 2013 and five years for investments made on or after July 1, 2013.
The nonrefundable credit is claimed in the tax year that includes the last day of the holding period and may be carried forward up to seven years. To qualify for the InvestOhio small business credit, the investor (or the qualifying enterprise on behalf of the investor) must apply to the Ohio Director of Development for a small business investment certificate. Certificates will be issued in the order in which the applications are received.
For more information on whether you may qualify for the InvestOhio small business credit, or how to apply for the credit, please contact us.