On July 18, 2019, Ohio Governor Mike DeWine’s operating budget was signed into law, including a 10 percent nonrefundable income tax credit to those who invest in the state’s Opportunity Zones.
The income tax credit is equal to 10 percent of capital gains reinvested, up to $1 million, into Qualified Opportunity Funds operating within Ohio. The newly signed legislation leverages the recently-enacted federal Qualified Opportunity Zone tax incentive to draw additional investment into areas of Ohio. Opportunity Zones are designated areas that are experiencing economic challenges. Enacted by the Tax Cuts and Jobs Act of 2017, the program provides a substantial federal tax benefit to individuals making long-term investments of qualifying funds into eligible Opportunity Zone businesses.
Because the federal tax incentive is deferred (after the investment has been held for a required minimum number of years), an early-stage Ohio investment credit is expected to provide an important inducement to steer investments to Ohio zones that may have otherwise gone to other purposes or to non-Ohio zones, and thereby spur new business activity in those Ohio communities in which the more than 300 Ohio zones are located.