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
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
The Research & Development
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
Must represent R&D in the
experimental sense and generally includes all such costs
related to the development or improvement of a product or
Must eliminate uncertainty
through a process of experimentation that considers one or
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
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
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
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
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.
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
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
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
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.