Tax Credit Certificate Program for Work-Based Learning Experiences
As passed in Senate Bill 166, this program allows a nonrefundable credit against a taxpayer's aggregate tax liability for a taxpayer that holds a tax credit certificate issued by the Department and employs an eligible student employee, defined below. The credit equals the amount listed on the certificate and shall be claimed for the taxable year that includes the last day of the calendar year for which the certificate was issued. The credit shall be claimed in the order required under section 5747.98 of the Ohio Revised Code
What Businesses are Eligible?
An employer who is a taxpayer or a pass-through entity, such as a Limited Liability Company, subject to the State of Ohio income tax and that employs an eligible employee in fulfillment of a work-based learning experience is eligible. The experience must be associated with an approved career-technical education (CTE) pathway in which the eligible employee is enrolled. New and current work-based learning experiences may be eligible for this tax credit.
Taxpayer is defined in section 5747.01 (N) of the Ohio Revised Code
as any person subject to the tax imposed by section 5747.02 of the Ohio Revised Code
or any passthrough entity that makes the election under division (D) of section 5747.08 of the Ohio Revised Code
. Pass-through entity generally means a corporation that has made an election under subchapter S of Chapter 1 of Subtitle A of the Internal Revenue Code
for its taxable year under that code, or a partnership or limited liability company. The Commercial Activity Tax (CAT) imposed under section 5751.02 of the Ohio Revised Code
is not state income tax and the income tax credit provided by Ohio Revised Code 5747.057
does not apply to CAT liability. If taxpayers are uncertain if they are subject to Ohio income tax, they should consult with their tax advisor.
Strengthening Career and Technical Education for the 21st Century Act (Perkins V)
defines work-based learning as sustained interactions with industry or community professionals in real workplace settings, to the extent practicable, or simulated environments at an educational institution that foster in-depth, firsthand engagement with the tasks required in a given career field, that are aligned to curriculum and instruction.
Eligible employee means an employee who is nineteen years of age or younger and enrolled in an approved CTE pathway.
To be considered enrolled in a CTE pathway, a student must be enrolled in at least one course within the approved pathway. Students enrolled in Career-Based Intervention and Family Consumer Sciences programs are eligible.
Eligible compensation means compensation paid on and after the effective date of March 23, 2022 from which the employer is required to deduct and withhold income tax.
- Name and Date of Birth of employee/student
- Employee/student Social Security Number (SSN)
- Employer Name and Address
- Employer Person of Contact/Phone/Email
- Type of Employment (Registered Pre-Apprenticeship/Registered Apprenticeship/Other (e.g., Paid Internship))
- Work Start and End Date
- Total compensation paid to employee/student during the preceding calendar year
- Name of CTE program in which the employee/student is enrolled
- Amount of tax credit received in any prior year for the employee/student
- Description of the employee/student’s duties as part of the work-based learning experience. Use the work-based learning agreement as an example.
Tax Credit and Funding Limits
Eligible employers may receive the lesser of $5,000 per eligible employee or 15% of wages paid to an eligible employee. The tax credit certificate is submitted with the employer’s Ohio income tax return and provides a credit against aggregate tax liability.
The total amount of funding is not to exceed $5 million within the state fiscal biennium (2-year period). Following the March 23, 2022 effective date of the new law, the first biennial period will run from the effective date through June 30, 2023; the next biennial period will be from July 1, 2023 to June 30, 2025.
- Eligible employer meets with CTE partner to outline mutual goals of the workbased learning experience, identify point persons for each organization and review application.
- Eligible employer submits application to the department.
- Department approves or denies application.
- If approved, the department sends tax credit certificate to business within 60 days of submission of the application.
- Eligible employer submits tax credit certificate when filing annual Ohio income tax return
Last Modified: 1/17/2023 10:00:30 AM