OHIO MANUFACTURING MACHINERY & EQUIPMENT
INVESTMENT TAX CREDIT
The Ohio Manufacturing Machinery & Equipment Investment Tax Credit was created to encourage the expansion of existing operations by upgrading machinery with new technology. This tax credit offers a non-refundable corporate franchise or state income tax credit for a manufacturer that purchases new machinery and equipment. This credit only applies to machinery and equipment that is located in Ohio and is used in the production or assembly of manufactured goods.
ELIGIBLE BUSINESSES
The Ohio Manufacturing Machinery & Equipment Investment tax credit is available to any Ohio manufacturing operation; corporation, partnership, limited liability company, or proprietorship. Eligible new investments must exceed the company’s three-year annual average investment in machinery and equipment. If a manufacturing operation has multiple facilities, the company must consider the three-year annual average investment of all the facilities located in the same county.
"Manufacturing machinery and equipment" is defined as engines, machinery, tools, and implements of every kind used or designed to be used, in refining and manufacturing. To be considered "new" manufacturing machinery and equipment, the original use in Ohio has to commence with the manufacturer; machinery or equipment used outside Ohio but purchased during the qualifying period and brought into Ohio qualifies as "new" despite its prior use outside Ohio. The cost of retooling manufacturing machinery and equipment qualifies if such costs are capitalized for a federal tax depreciation purpose.
TAX INCENTIVES
A manufacturer can receive a 7.5 percent tax credit on the increase of the investment which is in excess of the three-year annual average investment on machinery and equipment. A tax credit of 13.5 percent is available to manufacturers making investments in "Eligible Investment Areas." Annually the Ohio Department of Development identifies eligible areas. These areas must satisfy the definition of one of the following: distressed area, labor surplus area, inner city area, or situational distress area. For 1996, 27 counties and 22 communities are eligible for the 13.5 percent tax credit.
The purchase of machinery and equipment must be made between July 1, 1995 and December 31, 2005. The credit is available for each of the six distinct investment periods: July 1-December 31, 1995, calendar year 1996, calendar year 1997, calendar year 1998, calendar year 1999, and calendar year 2000. Installation of machinery can be made no later than December 31, 2006. The total value of the tax credit is divided equally over seven years and the manufacturer is permitted
SAMPLE CALCULATION
|
1996 New Equipment Purchases |
$10,000,000 |
|
Three Year Average Annual Investment* |
- $6,000,000 |
|
Net Eligible for Tax Credit |
$4,000,000 |
|
7.5% Tax Credit |
x 7.5% |
|
Total Tax Credit |
$300,000 |
|
Annual Tax Credit (over 7 years) |
$42,857 |
*For the first four investment periods (7/95-12/95, 1996, 1997, & 1998), the base years are 1992, 1993, and 1994. However, for the last two investment periods (1999 & 2000), the base years roll forward (i.e., for 1999, the base years are 1993, 1994, & 1995 and for 2000, the base years are 1994, 1995, & 1996).
NOTE: A manufacturer is to file a "Notice of Intent" with the ODOD, Office of Tax Incentives, as soon as possible after the manufacturing equipment purchase has been identified.
Currently the Ohio Manufacturer's Investment Tax Credits Applications can be accessed from the ODOD web site in 
. You must use Acrobat reader 3.0 
or better to view them.
Ohio Department of Development
Bob Taft, Governor
Bruce Johnson, Director
