InvestOhio - Personal Income Tax Credit for Investors in Ohio Small Businesses

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.

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View Steve Dimengo and Richard Fry's insights in their entirety on the Ohio State Tax Blog site.

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RELATED LINKS: For additional information about state personal income tax credits, see:

Bender's State Taxation: Principles & Practice is also avaiable in print at the LexisNexis® Store.

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