InvestOhio is a tax credit that reduces dollar-for-dollar an individual’s Ohio personal income tax liability. The credit equals 10% of the amount the individual invests in a small business. The individual is entitled to the credit if both apply:
A small business is one with less than $50 million in assets or $10 million in annual sales and a workforce exclusively in Ohio or, if there are 50 or more employees, with at least 50% of its workforce in Ohio.
The credit can be applied against tax liability generated by business income or nonbusiness. Business income includes income from sole proprietor activities and pass-through entity investments (partnerships, LLCs, etc.). Nonbusiness income includes wages from employment, income from personal investments, and income from casual rental activities.
The tax calculation would work as follows for an individual filing jointly who earned a $20,000 InvestOhio credit and had business income of $260,000 and nonbusiness income of $200,000 after personal exemptions:
As the above example illustrates, the tax credit is useful for investors who either earn more than $250,000 in business income or earn nonbusiness income, such as wages, or investment or rental income.
The registration and application process is relatively painless. If you’re interested in learning more, contact Steve Estelle.