The bill amends sections 5747.98 and 5751.51 of the Revised Code and enacts a new section, 5747.88, to expand the research and development tax credit to include income tax. The new section defines "qualified research expenses" in accordance with the Internal Revenue Code and establishes a nonrefundable credit equal to seven percent of the excess of qualified research expenses incurred in Ohio over the average annual qualified research expenses from the previous three years. Taxpayers can claim this credit in a specified order and carry forward any excess credit for up to seven years. Additionally, taxpayers must retain records to substantiate their claims for four years after the return due date or filing date, whichever is later.

The bill also includes provisions for the tax commissioner to audit a sample of a taxpayer's qualified research expenses and issue assessments based on the audit. Notably, the bill specifies that no credit will be allowed if it was previously available against the tax imposed by section 5751.02, except for any portion not applied against that tax. Furthermore, existing sections 5747.98 and 5751.51 are repealed, and the new provisions will apply to taxable years ending on or after the effective date of the bill.

Statutes affected:
As Introduced: 5747.98, 5751.51