HB 111 Summary

• Creates a new income tax deduction for small business owners who reinvest undistributed profits in business property, employee training, or research and development, with deductions capped at 5% of the business's gross income.

• Defines "eligible small business" as a sole proprietorship or pass-through entity with gross income not exceeding $1 million that reports net profit exceeding 3% of gross income and distributes less than the excess of net profit over 3% of gross income.

• Requires a "clawback" mechanism where owners must add back to income any undistributed profits that were not reinvested in qualifying expenditures by the following tax year.

• Applies to both individual taxpayers (division A(30)) and trust taxpayers (division S(15)) claiming the deduction for their respective taxable years beginning on or after the act's effective date.

• Defines qualifying reinvestment expenditures to include employee training costs, research and development costs as defined in Ohio law, and purchases of real or tangible personal property capitalized to a business account.