Corporation Franchise Tax
Corporate Franchise Tax Tables
Refundable and Nonrefundable Tax Credits Claimed, Tax Year
The attached corporate franchise tax table is a supplement to
the CF1-5 tax data series for tax year 2006. It
provides detail on the tax credits claimed by general
(non-financial institution) corporate franchise taxpayers.
Due to tax reform legislation enacted in 2005, the corporate
franchise tax phases out for most corporations, in 20 percent
increments, over a five-year period starting in tax year
2006. The phase-out worked as follows in tax year 2006.
Corporations computed their regular corporation franchise tax
liability, and then reduced such liability by any allowable
nonrefundable credits (excluding the pass-through entity tax
credit); the resulting net tax liability was then reduced by
20 percent. This means that, for all intents and
purposes, just 80 percent of the full, claimable
nonrefundable tax credits (other than the pass-through entity
tax credit) could be realized in tax year 2006, which is
fully consistent with the fact that just 80 percent of the
full, pre-credit tax liability was payable in tax year 2006.
In addition, the manufacturing grant was subject to the 20
percent phase-out factor for tax year 2006. This
manufacturing grant replaces the former credit for purchases
of new manufacturing machinery and equipment (the new
manufacturing grant and concomitant repeal of the
manufacturing tax credit were enacted in 2005 by Am. Sub.
House Bill 66). Finally, note that the pass-through entity
tax credit and the refundable job creation tax credit were
not subject to the 20 percent phase-out factor.
Both refundable and nonrefundable credits are shown in the
table, as is the manufacturing grant. Values are shown on
both a pre phase-out factor and a post phase-out factor
basis. The job creation tax credit is the only refundable
credit in tax year 2006; there were 223 corporate franchise
taxpayers claiming this credit, amounting to $43.6
The nonrefundable tax credits shown include the manufacturing
investment credit (this is the final year of the tax credit,
consisting of those taxpayers whose taxable year ended prior
to July 1, 2005), the coal credit for electric companies, the
job training credit, the research credit, the small telephone
company credit, and other miscellaneous credits (see the
table for a complete list). There were 1,507
nonrefundable credits claimed amounting to $81.3 million
(after the phase-out factor).
The data shown on these tables were compiled from returns
filed for tax year 2006 with the Ohio Department of Taxation.