As Introduced
136th General Assembly
Regular Session S. B. No. 187
2025-2026
Senators Smith, Schaffer
To amend sections 107.036 and 5747.98 and to enact
sections 122.853 and 5747.68 of the Revised Code
to temporarily authorize a refundable income tax
credit for investing in a sound recording
production company.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:
Section 1. That sections 107.036 and 5747.98 be amended
and sections 122.853 and 5747.68 of the Revised Code be enacted
to read as follows:
Sec. 107.036. (A) For each business incentive tax credit,
the main operating appropriations act shall contain a detailed
estimate of the total amount of credits that may be authorized
in each year, an estimate of the amount of credits expected to
be claimed in each year, and an estimate of the amount of
credits expected to remain outstanding at the end of the
biennium. The governor shall include such estimates in the state
budget submitted to the general assembly pursuant to section
107.03 of the Revised Code.
(B) As used in this section, "business incentive tax
credit" means all of the following:
(1) The job creation tax credit under section 122.17 of
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20 S. B. No. 187 Page 2
As Introduced
the Revised Code;
(2) The job retention tax credit under section 122.171 of
the Revised Code;
(3) The historic preservation tax credit under section
149.311 of the Revised Code;
(4) The motion picture and broadway theatrical production
tax credit under section 122.85 of the Revised Code;
(5) The new markets tax credit under section 5725.33 of
the Revised Code;
(6) The research and development credit under section
166.21 of the Revised Code;
(7) The small business investment credit under section
122.86 of the Revised Code;
(8) The rural growth investment credit under section
122.152 of the Revised Code;
(9) The opportunity zone investment credit under section
122.84 of the Revised Code;
(10) The transformational mixed use development credit
under section 122.09 of the Revised Code ;
(11) The sound recording production credit under section
122.853 of the Revised Code .
Sec. 122.853. (A) As used in this section:
(1) "Eligible expenditures" means actual production-
related costs in this state by a sound recording company for a
tax credit-eligible production or actual capital costs in this
state by a sound recording company for a tax credit-eligible
project.
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47 S. B. No. 187 Page 3
As Introduced
(2) "Expenditure in this state" means the cost of either
of the following:
(a) Acquiring tangible personal property or services in
this state that are subject to tax levied under section 5739.02
or 5741.02 of the Revised Code;
(b) Compensation for services performed within the state
subject to the tax levied under section 5747.02 of the Revised
Code.
(3) "Sound recording" means a recording of a music,
poetry, or spoken performance recorded, in whole or in part, in
this state. "Sound recording" does not include the audio
portions of dialogue or words spoken and recorded as part of
television news coverage or athletic events.
(4) "Sound recording production company" means a sole
proprietorship or a pass-through entity engaged in the
production of sound recordings.
(5) "Tax credit-eligible production" means the production
of a sound recording, or a series of such productions occurring
over a twelve-month period, certified by the director of
development under division (B) of this section as eligible for
the tax credit authorized under section 5747.68 of the Revised
Code.
(6) "Tax credit-eligible project" means a capital project
to construct or improve infrastructure for creating sound
recording productions certified by the director of development
under division (B) of this section as eligible for the tax
credit authorized under section 5747.68 of the Revised Code.
(7) "Investor" means an individual who owns a sound
production company that is a sole proprietorship or an
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
71
72
73
74
75
76 S. B. No. 187 Page 4
As Introduced
individual who owns a proportionate or distributive share of a
sound recording production company that is a pass-through
entity.
(8) "Pass-through entity" has the same meaning as in
section 5733.04 of the Revised Code, but does not include a sole
proprietorship.
(9) "Capital costs of a tax credit-eligible project" means
expenditures directly related to a tax credit-eligible project,
including land and land acquisition costs, construction costs,
design fees, furniture, fixtures, and equipment purchased
subject to a sale agreement or capital lease, but does not
include general administrative costs or insurance.
(10) "Production-related costs" means expenditures
directly related to a tax credit-eligible production.
(B)(1) The director of development may certify a sound
recording production or sound recording infrastructure project
as a tax credit-eligible production or tax credit-eligible
project, respectively. A sound recording production company
shall apply for certification of a sound recording production or
a sound recording capital infrastructure project as a tax
credit-eligible production or tax credit-eligible project,
respectively, in the form and manner prescribed by the director.
(a) An application to certify a tax credit-eligible
production shall include all of the following:
(i) The production's distribution plan;
(ii) The production's preliminary budget, including
estimated eligible expenditures;
(iii) A description of the type of sound to be recorded;
77
78
79
80
81
82
83
84
85
86
87
88
89
90
91
92
93
94
95
96
97
98
99
100
101
102
103
104 S. B. No. 187 Page 5
As Introduced
(iv) A list of the production's principal creative
elements, including performing artists and producers;
(v) The location, including street address, of the
recording studio or other location where production will occur;
(vi) A statement that the production will qualify as a tax
credit-eligible production;
(vii) The production's estimated start and completion
dates;
(viii) Any other information required by the director.
(b) An application to certify a tax credit-eligible
project shall include all of the following:
(i) A detailed description of the project, including the
project's location;
(ii) The project's preliminary budget, including eligible
expenditures;
(iii) A statement that the project will qualify as a tax
credit-eligible sound recording infrastructure project;
(iv) The project's estimated start and completion dates;
(v) Any other information required by the director.
(2) Upon receipt of a complete application, the director
of development may certify the sound recording production or
sound recording infrastructure project as a tax credit-eligible
production or tax credit-eligible project, respectively. If the
director receives an application that is incomplete, the
director may request that the applicant provide any omitted
information or reject the application. Within one hundred eighty
days after receiving a complete application, the director shall
105
106
107
108
109
110
111
112
113
114
115
116
117
118
119
120
121
122
123
124
125
126
127
128
129
130
131 S. B. No. 187 Page 6
As Introduced
approve or reject the application, and notify the applicant of
the director's decision. The director also shall notify the tax
commissioner and investor of each production or project the
director certifies as a tax credit-eligible production or tax
credit-eligible sound recording infrastructure project.
The director shall reject an application if the applicant
is a person, or any person owned, affiliated, or controlled, in
whole or in part, by any person that either owes debt that has
been certified to the attorney general under section 131.02 of
the Revised Code or has declared bankruptcy under which an
obligation of the person to pay or repay public funds or moneys
was discharged as a part of such bankruptcy. The rejection of an
application under this division does not prohibit an applicant
from filing another application under this section for the same
production or project.
(3) In making the director's determination under division
(B)(2) of this section, the director shall consider each of the
following factors:
(a) The impact of the production or project on the
encouragement and development in this state of a strong capital
and infrastructure base in order to achieve a more independent,
self-supporting music and sound recording industry;
(b) The impact of the production or project on the
employment of residents of this state;
(c) The impact of the production or project on the overall
economy of this state;
(d) If the application is for a tax credit-eligible
project, the availability of similar infrastructure facilities
located within fifty miles of the proposed project.
132
133
134
135
136
137
138
139
140
141
142
143
144
145
146
147
148
149
150
151
152
153
154
155
156
157
158
159
160 S. B. No. 187 Page 7
As Introduced
(C) A sound recording production company whose sound
recording production or sound recording capital infrastructure
project is certified under division (B) of this section as a tax
credit-eligible production or tax credit-eligible project, after
such production or project is completed, may apply to the
director of development to receive a refundable credit against
the tax imposed under section 5747.02 of the Revised Code, which
may be claimed by the company's investor or investors. The
director, in consultation with the commissioner, shall prescribe
the form and manner of the application under this division and
the information or documentation required to be submitted with
the application.
In addition to the application, the company shall report
the eligible expenditures related to that production or project,
which the director may require to be prepared by a certified
public accountant. Before awarding a certificate under this
division, the director may inspect the books, accounts, records,
and memoranda of a sound recording production company to audit
the accuracy of that report. The amount of credit awarded to
investors shall be proportionately reduced by the cost to the
director of any such audit. Upon receiving and examining the
report, the director may disallow any reported eligible
expenditure the director determines is not an eligible
expenditure. If the director disallows an expenditure, the
director shall issue a written notice to the sound recording
production company stating that the expenditure is disallowed
and the reason for the disallowance. Upon examination of the
report and disallowance of any expenditure, the director shall
determine eligible expenditures for the purpose of calculating
the amount of the credit.
Subject to the aggregate credit limit in division (D) of
161
162
163
164
165
166
167
168
169
170
171
172
173
174
175
176
177
178
179
180
181
182
183
184
185
186
187
188
189
190
191 S. B. No. 187 Page 8
As Introduced
this section, upon receipt of an application under this
division, the director shall issue a certificate to each
applicable investor showing the amount of the credit the
investor may claim under section 5747.68 of the Revised Code.
The director shall calculate that credit as follows:
(1) The amount of the credit equals twenty-five per cent
of eligible expenditures in excess of ten thousand dollars,
multiplied by the investor's proportionate or distributive share
of the sound production company if that company is a pass-
through entity.
(2) The amount of credit awarded to all investors for a
production or project shall not exceed seventy-five thousand
dollars. If the amount of the credit, as calculated under
division (C)(1) of this section, would exceed seventy-five
thousand dollars, the director shall reduce the amount of credit
awarded to each investor proportionately so that the total
amount so awarded to all such investors equals seventy-five
thousand dollars.
(3) No credit shall be awarded on the basis of any portion
of an eligible expenditure that is also an eligible production
expenditure that forms the basis of a credit awarded under
section 122.85 of the Revised Code.
(4) No credit shall be awarded for taxable years beginning
on or after January 1, 2029.
(D) The aggregate amount of credits certified for all
investors under division (C) of this section for any fiscal year
shall not exceed one million dollars. The director shall award
credit certificates for tax credit-eligible productions or tax
credit-eligible projects on a first-come, first-served basis.
192
193
194
195
196
197
198
199
200
201
202
203
204
205
206
207
208
209
210
211
212
213
214
215
216
217
218
219
220 S. B. No. 187 Page 9
As Introduced
(E) The director of development shall transmit a copy of
each certificate to the tax commissioner. The director in
consultation with the commissioner shall adopt rules in
accordance with Chapter 119. of the Revised Code necessary for
the administration of the credit authorized in this section.
Notwithstanding any provision of section 121.95 of the Revised
Code to the contrary, a regulatory restriction contained in a
rule adopted under this section is not subject to sections
121.95 to 121.953 of the Revised Code.
(F) On or before the thirty-first day of October each
even-numbered year, beginning with 2026 and ending with 2030,
the director of development shall prepare a report evaluating
the effect of the credit authorized under this section and
submit that report to the chair and ranking minority member of
the house of representatives and senate standing committees
dealing primarily with issues of taxation. The report shall
include the overall effect of such credits, the amount of such
credit certificates issued, the number of new jobs created and
payroll subject to the tax under section 5747.02 of the Revised
Code created as a result of the credits, the economic effect of
the credits on the sound recording industry, the amount of new
sounds recording infrastructure that has been developed in the
state, and any other factors that describe the effect of the
credits.
(G) The tax commissioner may assess an investor under
section 5747.13 of the Revised Code for any amount of credit
claimed by the investor but later determined by the commissioner
or the director of development to be disallowed under this
section, subject to the time limitations in that section.
(H) As a condition for a sound recording production
221
222
223
224
225
226
227
228
229
230
231
232
233
234
235
236
237
238
239
240
241
242
243
244
245
246
247
248
249
250 S. B. No. 187 Page 10
As Introduced
company's investors being awarded a credit certificate, the
director of development may require a tax credit-eligible
production to display the state's name or logo, as prescribed by
the director.
Sec. 5747.68. (A) Any term used in this section has the
same meaning as in section 122.853 of the Revised Code.
(B) There is allowed a refundable credit against the tax
imposed by section 5747.02 of the Revised Code for any
individual who, on the last day of the individual's taxable
year, holds a tax credit certificate issued under section
122.853 of the Revised Code. The credit shall be claimed for the
taxable year that includes the date the certificate was issued.
The credit amount equals the amount stated in the certificate.
The credit shall be claimed in the order required under section
5747.98 of the Revised Code. If the credit amount exceeds the
tax otherwise due under section 5747.02 of the Revised Code
after deducting all other credits in that order, the excess
shall be refunded.
Sec. 5747.98. (A) To provide a uniform procedure for
calculating a taxpayer's aggregate tax liability under section
5747.02 of the Revised Code, a taxpayer shall claim any credits
to which the taxpayer is entitled in the following order:
Either the retirement income credit under division (B) of
section 5747.055 of the Revised Code or the lump sum retirement
income credits under divisions (C), (D), and (E) of that
section;
Either the senior citizen credit under division (F) of
section 5747.055 of the Revised Code or the lump sum
distribution credit under division (G) of that section;
251
252
253
254
255
256
257
258
259
260
261
262
263
264
265
266
267
268
269
270
271
272
273
274
275
276
277
278
279 S. B. No. 187 Page 11
As Introduced
The dependent care credit under section 5747.054 of the
Revised Code;
The credit for displaced workers who pay for job training
under section 5747.27 of the Revised Code;
The campaign contribution credit under section 5747.29 of
the Revised Code;
The twenty-dollar personal exemption credit under section
5747.022 of the Revised Code;
The joint filing credit under division (G) of section
5747.05 of the Revised Code;
The earned income credit under section 5747.71 of the
Revised Code;
The nonrefundable credit for education expenses under
section 5747.72 of the Revised Code;
The nonrefundable credit for donations to scholarship
granting organizations under section 5747.73 of the Revised
Code;
The nonrefundable credit for tuition paid to a
nonchartered nonpublic school under section 5747.75 of the
Revised Code;
The nonrefundable vocational job credit under section
5747.057 of the Revised Code;
The nonrefundable job retention credit under division (B)
of section 5747.058 of the Revised Code;
The enterprise zone credit under section 5709.66 of the
Revised Code;
The credit for beginning farmers who participate in a
280
281
282
283
284
285
286
287
288
289
290
291
292
293
294
295
296
297
298
299
300
301
302
303
304
305
306 S. B. No. 187 Page 12
As Introduced
financial management program under division (B) of section
5747.77 of the Revised Code;
The credit for commercial vehicle operator training
expenses under section 5747.82 of the Revised Code;
The nonrefundable welcome home Ohio (WHO) program credit
under section 122.633 of the Revised Code;
The credit for selling or renting agricultural assets to
beginning farmers under division (A) of section 5747.77 of the
Revised Code;
The credit for purchases of qualifying grape production
property under section 5747.28 of the Revised Code;
The small business investment credit under section 5747.81
of the Revised Code;
The nonrefundable lead abatement credit under section
5747.26 of the Revised Code;
The opportunity zone investment credit under section
5747.86 of the Revised Code;
The enterprise zone credits under section 5709.65 of the
Revised Code;
The research and development credit under section 5747.331
of the Revised Code;
The credit for rehabilitating a historic building under
section 5747.76 of the Revised Code;
The nonrefundable Ohio low-income housing tax credit under
section 5747.83 of the Revised Code;
The nonrefundable affordable single-family home credit
under section 5747.84 of the Revised Code;
307
308
309
310
311
312
313
314
315
316
317
318
319
320
321
322
323
324
325
326
327
328
329
330
331
332
333 S. B. No. 187 Page 13
As Introduced
The nonresident credit under division (A) of section
5747.05 of the Revised Code;
The credit for a resident's out-of-state income under
division (B) of section 5747.05 of the Revised Code;
The refundable motion picture and broadway theatrical
production credit under section 5747.66 of the Revised Code;
The refundable credit for film and theater capital
improvement projects under section 5747.67 of the Revised Code;
The refundable jobs creation credit or job retention
credit under division (A) of section 5747.058 of the Revised
Code;
The refundable credit for taxes paid by a qualifying
entity granted under section 5747.059 of the Revised Code;
The refundable credits for taxes paid by a qualifying
pass-through entity granted under division (I) of section
5747.08 of the Revised Code;
The refundable credit under section 5747.80 of the Revised
Code for losses on loans made to the Ohio venture capital
program under sections 150.01 to 150.10 of the Revised Code;
The refundable credit for rehabilitating a historic
building under section 5747.76 of the Revised Code;
The refundable credit for sound recording production under
section 5747.68 of the Revised Code;
The refundable credit under section 5747.39 of the Revised
Code for taxes levied under section 5747.38 of the Revised Code
paid by an electing pass-through entity.
(B) For any credit, except the refundable credits
334
335
336
337
338
339
340
341
342
343
344
345
346
347
348
349
350
351
352
353
354
355
356
357
358
359
360 S. B. No. 187 Page 14
As Introduced
enumerated in this section and the credit granted under division
(H) of section 5747.08 of the Revised Code, the amount of the
credit for a taxable year shall not exceed the taxpayer's
aggregate amount of tax due under section 5747.02 of the Revised
Code, after allowing for any other credit that precedes it in
the order required under this section. Any excess amount of a
particular credit may be carried forward if authorized under the
section creating that credit. Nothing in this chapter shall be
construed to allow a taxpayer to claim, directly or indirectly,
a credit more than once for a taxable year.
Section 2. That existing sections 107.036 and 5747.98 of
the Revised Code are hereby repealed.
361
362
363
364
365
366
367
368
369
370
371
372