Ohio Tax Credits & Incentives

Federal, state and local programs exist to encourage investment in certain geographic areas or in certain types of buildings or land. Most location-based incentives target attracting investment into economically distressed areas. KJK has experience structuring location-based tax credits and incentives such as:

• Opportunity Zone (OZ) Investments
• Historic Tax Credits
• New Market Tax Credits
• Brownfield/Vacant Property Incentives

 KJK can assist in structuring an OZ investment.

Many of the aforementioned programs have complex tax structuring and statutory requirements; however, they can provide subsidies between 20-45% of your project value. KJK can help assess what location-based incentives provide the most value to close the financing gap on your project and develop an approach for doing so.

States and local governments often have grants or tax credits that grant an employer a certain percentage of new payroll and/or income tax generated from new employees/new payroll to the jurisdiction. For example, Ohio’s flagship incentive, the Ohio Job Creation Tax Credit (Ohio JCTC) provides a refundable credit against Ohio’s commercial activity tax (CAT) for a negotiated rate and term. Qualifying projects must create at least $660,000 of new payroll and create 10 new jobs over a 3-year term. Subject to a variety of negotiating factors, most credits are between 1-2% of payroll and have an average term of 5-7 years. 

Additional programs exist to offset the cost of capital expenditures (such as investment in machinery and equipment, or the cost of workforce development and training). Some, but not all, require negotiation through establishing a competitive justification for support such as:

• JobsOhio’s Economic Development Grant
• JobsOhio’s Workforce Training Grant 

Other sources of support related to job creation and retention do not require a negotiation, but compliance with program guidelines such as:

• On-the-Job Training Assistance through Ohio Means Jobs (local workforce investment boards)
• OhioTech Cred

Job creation- and retention-based credits have guidelines regarding measuring employment, calculating payroll and related issues. KJK can assist in understanding these requirements to determine if these types of incentives add value to your growth opportunity.

States and local communities normally provide incentives to offset the increase in real property taxes when companies or developers make larger investments in new construction or existing building renovations. In Ohio, to receive a tax abatement on the increased value of property taxes assessed as a result of an investment in new construction or building renovation, properties must be located in a designated Community Reinvestment Area or Enterprise Zone. Tax abatements often require approval of both the local legislative authority as well as the local school district.

In addition to, or lieu of a tax abatement, real estate development projects also can be financed through the use of Tax Increment Financing (TIF). Instead of not paying all or a portion of increased real property taxes through an abatement, a TIF redirects paid property taxes back to the project to pay for public infrastructure or, in some cases, private investment in urban areas. The TIF payment can either go directly to the property owner or be used to leverage debt, typically through a bond issuance, to provide up-front capital to a project.

Finally, there is a growing trend in Ohio for the use of PACE (Property Assessed Clean Energy) financing in Ohio. PACE will finance approximately 20-25% of project costs provided that the project contains certain energy efficiency related benefits as demonstrated through an energy audit. The PACE loan is repaid through a special assessment placed on the property.  

Property Tax Abatements, TIFs and PACE financing can help close large gaps in project financing; however, all require careful negotiation to structure each program to provide the largest value to your project.