Ohio · research and development · OH-RD-001
Research and Development Investment Tax Credit
Publication revised September 24, 2026. Sourcebook page 220.
Credit amount / calculation
7% of excess Ohio qualified research expenses over the average of the prior three years; nonrefundable with carryforward.
Business fit and eligible activity
Ohio's CAT-based research credit can apply to qualified research by wood-products manufacturers without a project award. Qualified research activity. Ordinary production, routine quality control and an equipment purchase alone do not qualify.
Eligibility and practical use
For forest products, research credits usually live on the mill floor rather than in a laboratory. Scanner settings, drying schedules, process-control changes, product testing, and equipment modifications can matter when the work is experimental rather than routine. A logging company has a narrower path, but equipment-control, software, or process-development work can sometimes qualify if it satisfies the same technical tests.
Illustrative business benefit
A hardwood mill spends $320,000 on a documented project to improve recovery from low-grade logs using scanner changes, controlled test runs, software adjustments, and revised sawing patterns. Assume $200,000 is ultimately treated as the relevant qualified or excess research base. At 7%, the state credit would be about $14,000 before program caps and tax-liability limits. The company would need records showing the uncertainty, alternatives tested, people involved, and results - not simply a year-end estimate of 'engineering time.'
Timing / first action
Tax-year claim: document the eligible expense, hire or placed-in-service date and meet any separate certification deadline. Identify the technical uncertainty and start contemporaneous project records before trying to calculate the credit.
Official sources
- codes.ohio.gov — Ohio Revised Code (codes.ohio.gov)
Related programs
Job Creation Tax Credit
Negotiated percentage of new Ohio employee
Expanding manufacturers creating substantial new Ohio payroll can negotiate a refundable credit through the Ohio Tax Credit Authority.
Ohio Historic Preservation Tax Credit
Credit based on qualified rehabilitation expenditures
A qualifying historic industrial building can receive a competitively awarded rehabilitation credit.
Clean Electricity Investment Credit (Internal Revenue Code §48E)
Generally
Potentially relevant when a forest-products facility owns qualifying zero-emission generation or energy-storage property.
Clean Electricity Production Credit (Internal Revenue Code §45Y)
Production-based
Alternative to the investment credit for owners/operators of qualifying clean-electricity facilities; potentially relevant to qualifying on-site generation.
Credit for Increasing Research Activities (Internal Revenue Code §41)
Regular research-credit method
A sawmill, secondary manufacturer or biomass business can qualify when it performs genuine technological experimentation to improve a product or process.