The R&D Tax Credit: Helping Businesses in Ohio Succeed

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Ohio Ohio has become a center for major new investments in technology and business.  It is also home to some of the best technologically advanced institutions of higher learning. 

We have covered a good number of the 3D printing projects underway in the State on the leading 3D printing blog, Fabbaloo.

From a small eyewear manufacturer1 to Intel opening a new $20 billion facility in Ohio, it appears that Ohio has much to be discovered.  We will look at some of the top industries contributing to Ohio’s economic and technological success.

The Research & Development Tax Credit

Enacted in 1981, the now permanent Federal Research and Development (R&D) Tax Credit allows a credit that typically ranges from 4%-7% of eligible spending for new and improved products and processes. Qualified research must meet the following four criteria:

  • Must be technological in nature
  • Must be a component of the taxpayers business
  • Must represent R&D in the experimental sense and generally includes all such costs related to the development or improvement of a product or process
  • Must eliminate uncertainty through a process of experimentation that considers one or more alternatives

Eligible costs include U.S. employee wages, cost of supplies consumed in the R&D process, cost of pre-production testing, U.S. contract research expenses, and certain costs associated with developing a patent.

On December 18, 2015, President Obama signed the PATH Act, making the R&D Tax Credit permanent. Beginning in 2016, the R&D credit can be used to offset Alternative Minimum tax for companies with revenue below $50MM and for the first time, pre-profitable and pre-revenue startup businesses can obtain up to $250,000 per year in payroll taxes and cash rebates.

Ohio’s R&D Credit

In July 2008, the State of Ohio established its own credit for Qualified Research Expenses.  The Research and Development Investment Tax Credit provides a tax credit that can be taken to offset Commercial Activity Tax (CAT) liability.  The Ohio credit is designed to encourage Ohio's corporations to invest in increased Research and Development activities.  The implementation of this R&D Investment Tax Credit ensures that innovative businesses are rewarded for initiating new R&D projects and enabled others to continue budgeting ahead for long-term R&D projects.

Authorized by Ohio Code Section 5751.51, the Ohio R&D tax credit is a nonrefundable tax credit of 7% of Qualifying Research Expenses more than the taxpayer's average investment in Qualifying Research Expenses over the past three years on in-house and contractual R&D performed in Ohio.  Using the federal definition to determine qualifying research expenditures, businesses calculate their credit based on their average expenditure on R&D for the latest three tax years.  Excess credit not used in the taxable year in which it is earned may be carried forward for up to seven years.  The R&D tax credit is an effective way to support research and development, which plays a critical role in any innovation ecosystem.

The Ohio R&D Tax Credit equals seven percent of the amount of Qualified Research Expenses (QREs) more than the taxpayer's average investment in Qualifying Research Expenses over the three preceding taxable years.

Top Tech Industries in Ohio

Ohio is home to some key tech industries.  The three main industries driving the Ohio economy are manufacturing, agriculture, and transportation.


Not only is manufacturing a revenue generator for the State, but it is also the largest single segment of Ohio’s employment, before being surpassed by the service sector in the late 20th century.  Despite this, manufacturing remains the largest single revenue contributor to the economy, amounting to about one-fifth of the state’s Gross Domestic Product (GDP).2

In 2019, Ohio boasted an average of 703,000 manufacturing employees, with manufacturing output accounting for about 16.60% of the total GDP in the State.


On January 21, 2022, Intel revealed its plans for the construction of two new leading-edge chip factories in Ohio.  Intel’s Ohio $20 billion site is expected to grow into a full-fledged “mega factory,” a major contributor to Intel’s leading-edge manufacturing network.  The investment is expected to grow to over $100 billion over the next decade.  Not only has intel invested in Ohio, but several of its supply chain members have committed to establishing presences in Ohio as well.  Semiconductor chips made in Ohio will help boost the economy and create an ecosystem of innovation that will allow the U.S. to earn its place as the global leader in semiconductor manufacturing.

Licking County, where the plant will be built, is near the burgeoning metropolis, Columbus, with robust infrastructure, great institutions of higher education.  Columbus is a prime location since it is within a day’s drive to almost every major Midwest city.  Intel appears to be in Ohio for the long haul.


Ohio has consistently ranked near the top in terms of agriculture.  Although the number of farms and farmers has decreased in the past century, Ohio is still roughly fifty percent farmland. 

Commercial farming3 and agribusiness have largely supported family farms in producing cash crops, mainly poultry, cattle, soybeans, dairy and corn.  These farms differ in growing techniques and methods, whether they are certified organic or conventional farms, and contribute about $124 billion to Ohio’s economy each year.4


Ohio’s infrastructure is optimal for supporting a solid transportation system in the State.  Whether it is by car, train, boat, plane or bus, it is smooth riding in the Buckeye State.  Construction5 projects support the transportation system in Ohio. 

In fact, there are several projects underway including, but not limited to, SR 235 Improvements, US 24, SR 111, and SR 66 Landslide Repairs as well as the I-75 Major Reconstruction and DiSalle Bridge Replacement.

I-75 between the cities of Northwood, Rossford and Toledo, will be widened, reconstructed, and the DiSalle bridge will be replaced.  This project will be ongoing through the fall of 2023 and is budgeted for approximately $343,000,000.6

Fitz Frames

3D printing is becoming an increasingly utilized advanced manufacturing technique in Ohio.  One Ohio-based business focuses on 3D printing eyewear, customized to customer needs.

Youngstown has grown from being an old “steel town”7 (for traditional manufacturing) to now being a 3D printing hub. The America Makes initiative helped make Youngstown the leading additive manufacturing hub in the nation. Youngstown is the center of a 3D printing ecosystem that is growing with satellite centers being added in recent years. Youngstown has become a major U.S. center for 3D printing, which gives Fitz Frames a strong resource base to benefit from.

University Research

In addition to supporting innovation spurred by industry, Ohio is home to various universities and facilities that are spearheading major research efforts.

The University of Akron

A public university, the University of Akron has more than 200 undergraduate majors including, but not limited to, Advanced Manufacturing Engineering Technology, Aerospace Systems Engineering and Biomedical Engineering.  In addition, the College of Engineering and Polymer Science allows graduate students to explore various disciplines such as biomolecular and corrosion engineering as well as computer engineering.

Ohio University

Students at Ohio University can study various technical disciplines such as biological sciences, chemical engineering, civil engineering, and computer science, to name a few.  In addition, the University’s Innovation Center is considered a top business program for viable early stage, technology-based companies, as well as for established tech companies.  The Innovation Center offers professional space, onsite coaching, access to a network of industry experts, support and much more.

Case Western Reserve

Located in Cleveland, Ohio, this private university is both an educational and a research institution.  Graduate programs are offered in engineering, medicine, and many more technical disciplines.  The research being conducted at Case Western8 is considered top-notch and highly innovative.  The University is conducting ground-breaking research on how to translate ideas into future realities.  The University is being granted an exclusive license to Ionis Pharmaceuticals to advance antisense therapy for Pelizaeus-Merzbacher disease.9

Cleveland Clinic

World-renowned for its pioneering work dealing with heart issues, the Cleveland Clinic is one of Ohio’s premier medical facilities that has flourished in other regions as well.

Cleveland Clinic has been breaking boundaries in heart, vascular and thoracic medicine for quite some time now.  Whether it is creating renal vascular surgeries to treat hypertension, a novel approach, or performing transcatheter aortic valve replacements, the Cleveland Clinic is reaching milestones and creating benchmarks for other facilities to follow.

Whether it is the highest quality medical education or cutting-edge research, Cleveland Clinic has been inspiring the future of healthcare for about 100 years now.


The 2022 Superbowl brought Ohio to center stage, or rather, arena, and showed the world what Cincinnati has to offer.  While the Bengals did not win the Superbowl, they did bring attention to their hometown and their state, Ohio.

R&D and innovation encourages perpetual economic growth. There are many R&D tax credit opportunities available for innovative companies in Ohio.  Businesses should be aware of federal and state tax incentives which are available to them to help shoulder the costs of further innovation and growth.

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