Authorize tax credit for qualifying technology investments

hb844_00_IN

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.