As Introduced

136th General Assembly

Regular Session H. B. No. 844

2025-2026

Representatives Click, Mathews, T.

Cosponsor: Representative Mullins

To amend sections 107.036 and 5747.98 and to enact sections 122.863 and 5747.88 of the Revised Code to authorize an income tax credit for businesses that make qualifying technology investments.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:

Section 1. That sections 107.036 and 5747.98 be amended and sections 122.863 and 5747.88 of the Revised Code be enacted to read as follows:

Sec. 107.036. (A) For each business incentive tax credit, the main operating appropriations act shall contain a detailed estimate of the total amount of credits that may be authorized in each year, an estimate of the amount of credits expected to be claimed in each year, and an estimate of the amount of credits expected to remain outstanding at the end of the biennium. The governor shall include such estimates in the state budget submitted to the general assembly pursuant to section 107.03 of the Revised Code.

(B) As used in this section, "business incentive tax credit" means all of the following:

(1) The job creation tax credit under section 122.17 of the Revised Code;

(2) The job retention tax credit under section 122.171 of the Revised Code;

(3) The historic preservation tax credit under section 149.311 of the Revised Code;

(4) The motion picture and broadway theatrical production tax credit under section 122.85 of the Revised Code;

(5) The new markets tax credit under section 5725.33 of the Revised Code;

(6) The research and development credit under section 166.21 of the Revised Code;

(7) The small business investment credit under section 122.86 of the Revised Code;

(8) The rural growth investment credit under section 122.152 of the Revised Code;

(9) The opportunity zone investment credit under section 122.84 of the Revised Code;

(10) The transformational mixed use development credit under section 122.09 of the Revised Code;

(11) The business technology investment credit under section 122.863 of the Revised Code.

Sec. 122.863. (A) As used in this section:

(1) "Eligible business" means a business that is independently owned and operated, that employs fewer than fifty employees, and that maintains its principal place of business in this state.

(2) "Eligible technology investment" means expenditures for the purchase and implementation of specific technologies that directly support core business operations, transactions, compliance, inventory, labor management, or data security. An "eligible technology investment" is limited to the hardware, software, and installation costs directly associated with such technologies, including electronic shelf labels, point-of-sale systems, inventory management software, pricing and labeling systems, accounting and payroll software, customer relationship management software, e-commerce and order management systems, workforce scheduling and timekeeping systems, data backup and recovery systems, and cybersecurity hardware or software.

(3) "Distressed area" has the same meaning as in section 122.16 of the Revised Code.

(4) "Veteran" has the same meaning as in section 122.925 of the Revised Code.

(B) The director of development shall establish a business technology investment tax credit program to encourage modernization and competitiveness among the state's small businesses. An eligible business that makes an eligible technology investment may apply to the director of development to obtain a business technology investment tax credit certificate. The director shall prescribe the form or manner in which an applicant shall apply for the certificate, devise the form of the certificate, and prescribe any records or other information an applicant shall furnish with the application to evidence the eligible technology investment.

Subject to division (C) of this section, the director shall award business technology investment certificates to eligible businesses in the order in which the director receives applications, provided that the director shall reserve at least ten per cent of the certificates available each fiscal year for businesses that are either located in a distressed area or that are owned, in whole or in part, by a veteran. An application is complete when the director has validated that an eligible business has made an eligible technology investment and receives all required documentation needed to demonstrate the eligible business satisfies the requirements of division (A)(1) of this section.

(C)(1) Subject to division (C)(2) of this section, if the director determines that an applicant qualifies for a credit under this section, the director shall issue, within sixty days after receipt of the application, a tax credit certificate to the applicant. The certificate shall identify the applicant with a unique number and shall list the amount of credit eligible to be claimed, which shall equal thirty per cent of the eligible technology investment but which shall not exceed seventy-five thousand dollars.

(2) The total amount of tax credit certificates issued by the director in each fiscal year shall not exceed twenty million dollars.

(D) The director shall not issue more than one business technology investment tax credit certificate to any eligible business under this section.

(E) On or before the first day of September each year, the director of development shall submit a report to the governor and, in accordance with section 101.68 of the Revised Code, the general assembly on the tax credit program authorized under this section. The report shall include information on the number, type, and geographic distribution of businesses awarded credit certificates in the preceding fiscal year, the total value of eligible technology investments upon which those credits were based, and any documented outcomes related to productivity, job creation, or cost savings. In the report, the director shall also provide recommendations regarding the tax credit program's continuation or modification.

(F) The director may adopt rules in accordance with Chapter 119. of the Revised Code as necessary to administer this section.

Sec. 5747.88. There is allowed a nonrefundable credit against a taxpayer's aggregate tax liability under section 5747.02 of the Revised Code for a taxpayer to whom a business technology investment tax credit certificate is issued under section 122.863 of the Revised Code. The credit equals the amount listed on the certificate and shall be claimed for the taxable year in which the certificate was issued.

The credit shall be claimed in the order required under section 5747.98 of the Revised Code. If the credit exceeds the aggregate amount of tax otherwise due for the taxable year, the excess may be carried forward and applied against the tax due for not more than two succeeding taxable years, provided that the amount applied to the tax due for any taxable year shall be subtracted from the amount available to carry forward to succeeding years.

Nothing in this section limits or disallows pass-through treatment of the credit if the tax credit certificate has been issued to a pass-through entity.

Sec. 5747.98. (A) To provide a uniform procedure for calculating a taxpayer's aggregate tax liability under section 5747.02 of the Revised Code, a taxpayer shall claim any credits to which the taxpayer is entitled in the following order:

Either the retirement income credit under division (B) of section 5747.055 of the Revised Code or the lump sum retirement income credits under divisions (C), (D), and (E) of that section;

Either the senior citizen credit under division (F) of section 5747.055 of the Revised Code or the lump sum distribution credit under division (G) of that section;

The dependent care credit under section 5747.054 of the Revised Code;

The credit for displaced workers who pay for job training under section 5747.27 of the Revised Code;

The twenty-dollar personal exemption credit under section 5747.022 of the Revised Code;

The joint filing credit under division (E) of section 5747.05 of the Revised Code;

The earned income credit under section 5747.71 of the Revised Code;

The nonrefundable credit for education expenses under section 5747.72 of the Revised Code;

The nonrefundable credit for donations to scholarship granting organizations under section 5747.73 of the Revised Code;

The nonrefundable credit for tuition paid to a nonchartered nonpublic school under section 5747.75 of the Revised Code;

The nonrefundable vocational job credit under section 5747.057 of the Revised Code;

The nonrefundable credit for business technology investment tax credit certificate holders under section 5747.88 of the Revised Code;

The nonrefundable job retention credit under division (B) of section 5747.058 of the Revised Code;

The enterprise zone credit under section 5709.66 of the Revised Code;

The credit for beginning farmers who participate in a financial management program under division (B) of section 5747.77 of the Revised Code;

The credit for commercial vehicle operator training expenses under section 5747.82 of the Revised Code;

The nonrefundable welcome home Ohio (WHO) program credit under section 122.633 of the Revised Code;

The nonrefundable credit for transformational mixed use development tax credit certificate holders under section 5747.87 of the Revised Code;

The credit for selling or renting agricultural assets to beginning farmers under division (A) of section 5747.77 of the Revised Code;

The credit for purchases of qualifying grape production property under section 5747.28 of the Revised Code;

The small business investment credit under section 5747.81 of the Revised Code;

The nonrefundable lead abatement credit under section 5747.26 of the Revised Code;

The opportunity zone investment credit under section 5747.86 of the Revised Code;

The enterprise zone credits under section 5709.65 of the Revised Code;

The research and development credit under section 5747.331 of the Revised Code;

The credit for rehabilitating a historic building under section 5747.76 of the Revised Code;

The nonrefundable Ohio low-income housing tax credit under section 5747.83 of the Revised Code;

The nonrefundable affordable single-family home credit under section 5747.84 of the Revised Code;

The nonresident credit under division (A) of section 5747.05 of the Revised Code;

The credit for a resident's out-of-state income under division (B) of section 5747.05 of the Revised Code;

The refundable motion picture and broadway theatrical production credit under section 5747.66 of the Revised Code;

The refundable jobs creation credit or job retention credit under division (A) of section 5747.058 of the Revised Code;

The refundable credit for taxes paid by a qualifying entity granted under section 5747.059 of the Revised Code;

The refundable credits for taxes paid by a qualifying pass-through entity granted under division (I) of section 5747.08 of the Revised Code;

The refundable credit under section 5747.80 of the Revised Code for losses on loans made to the Ohio venture capital program under sections 150.01 to 150.10 of the Revised Code;

The refundable credit for rehabilitating a historic building under section 5747.76 of the Revised Code;

The refundable credit under section 5747.39 of the Revised Code for taxes levied under section 5747.38 of the Revised Code paid by an electing pass-through entity.

(B) For any credit, except the refundable credits enumerated in this section and the credit granted under division (H) of section 5747.08 of the Revised Code, the amount of the credit for a taxable year shall not exceed the taxpayer's aggregate amount of tax due under section 5747.02 of the Revised Code, after allowing for any other credit that precedes it in the order required under this section. Any excess amount of a particular credit may be carried forward if authorized under the section creating that credit. Nothing in this chapter shall be construed to allow a taxpayer to claim, directly or indirectly, a credit more than once for a taxable year.

Section 2. That existing sections 107.036 and 5747.98 of the Revised Code are hereby repealed.