The R&D Tax Credit is back! Find out how the Big Beautiful Bill Act can fund your R&D. Learn More
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Ohio offers a Research and Development Tax Credit that encourages companies to increase their qualified research spending within the state. The program mirrors the federal R&D credit in many respects and can be claimed alongside it.
The Ohio credit equals 7% of qualified research expenses (QREs) that exceed the taxpayer’s average QREs for the prior three years. This “incremental” structure means companies that expand their research activity in Ohio see the greatest benefit.
Qualified expenses follow the federal IRC §41 definition but must be tied to research conducted within Ohio. Common QREs include:
To claim the credit, taxpayers report the amount on the Ohio IT 1040 (individual income tax), IT 4708 (pass-through entity return), or CAT return (Commercial Activity Tax), depending on entity type. Unlike many other states, Ohio’s R&D credit applies against the Commercial Activity Tax, which makes it unique. Unused credits may be carried forward for up to seven years.
📄 Ohio Department of Taxation – R&D Credit Overview
📄 Ohio Tax Forms & Instructions
It’s important to note that Ohio’s focus on incremental spending rewards companies that continually increase their investment in research year over year. Coordinating federal and state filings ensures maximum benefit. Our team helps companies track eligible costs, prepare documentation, and file claims that withstand review.
Starting in tax year 2025, businesses can now immediately deduct domestic R&D expenses in the year they occur instead of spreading deductions over five years. The bill also offers refund opportunities for small businesses and faster deduction schedules for larger companies.
If your business has $31 million or less in annual gross receipts, you may be able to:
File amended returns for 2022–2024 to get cash refunds for previously capitalized R&D costs
Deduct remaining unamortized R&D expenses faster starting in 2025
Apply your R&D credit against payroll taxes—up to $500,000 per year for qualifying startups
Yes. Eligible small businesses can retroactively deduct R&D costs from 2022–2024 and claim refunds. Even larger companies can accelerate the deduction of past R&D costs over one or two years starting in 2025.
No. The 15-year amortization rule for foreign R&D remains in place. The new immediate expensing option only applies to U.S.-based research and development.
Savings vary, but many businesses may recover hundreds of thousands of dollars through a combination of:
Full expensing of domestic R&D costs
Retroactive refunds for 2022–2024
Annual R&D tax credits (often worth 5–10% of qualifying expenses)
Startups with less than $5 million in annual revenue can use the R&D credit to offset payroll taxes—up to $500,000 per year—resulting in quarterly cash refunds, even without taxable income.
Work with our expert team at TaxTaker. We help innovative companies like yours identify, document, and claim the maximum R&D tax credit available—while ensuring you stay fully compliant with IRS requirements. Our team specializes in both federal and state R&D tax credits, and we know how to uncover hidden value by reviewing past filings for potential refund opportunities. With the new 2025 rules in place, we’ll build a tailored strategy that maximizes your savings now and in the years ahead. That’s why businesses across the country trust TaxTaker to deliver results they can count on.
Working with TaxTaker is risk free. TaxTaker collects a success fee only if you qualify for a tax credit.
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