Frequently Asked Questions

The Ohio Department of Taxation has compiled a list of frequently asked questions covering many different categories.

To view the questions, click on the "Select Category" bar and then click on the category you are interested in.  A list of questions will appear pertaining to that category. Then click on the question you are inquiring about and the answer will appear.

How does the phase-out affect the nonrefundable credit for taxes paid by a qualifying pass-through entity?

Beginning with the 2006 report year, franchise taxpayers subject to the phase-out multiplied their franchise tax after nonrefundable credits (other than the nonrefundable credit for tax paid by a qualifying pass-through entity) by the phase-out factor. The nonrefundable credit for taxes paid by a qualifying pass-through entity was not subject to the phase-out factor. Rather than applying the phase-out factor to this credit, the new law phased out the tax that a pass-through entity paid on its Ohio income passing through to qualifying investors that were subject to the franchise tax phase-out. See table below.

Pass-Through Entity’s

                       Taxable Year Ending in:

Pass-Through Entity’s Tax Rate on its Ohio Income Passing Through to Qualifying Investors Subject to the Franchise Tax Phase-Out

2005

6.8% (80% x 8.5%)

2006

5.1% (60% x 8.5%)

2007

3.4% (40% x 8.5%)

2008

1.7% (20% x 8.5%)

2009 and thereafter

0% (0% x 8.5%)