Tag: 2023 film incentives

Whether they are a financial godsend or a revenue burden to states, production continues to boom because of film incentives and tax credits. However, the challenge for any producer is to stay up to date as incentives are in a constant state of flux… or disappear entirely.

Louisiana was the first state to adopt a tax incentive program for film and television production in 1992 and the strategy took off nationwide. Today, at least 35 states, DC, Puerto Rico, and the U.S. Virgin Islands offer tax incentives for film production.

The good news is that there are lots of options. Many states have an incentive of some kind to encourage you to shoot your project there. However, applying for a tax credit or incentive can be complicated, especially since every state has different rules and regulations to follow.

Film Incentives – Types

While there are six main types of film incentives, they will vary depending on the state.

• Refundable Tax Credit – The state will pay the production company in excess of the company’s owed state tax.
• Non-Refundable Tax Credit – Any amount that remains from the credit is automatically forfeited.
• Transferable Refundable Tax Credit – Can transfer the credit over to a local company so that they can reduce their tax liability.
• Tax Rebate – A refund check issued from the state directly to the production company.
• Grant – Direct payment issued to the production company by the state. Unlike rebates, you do not have to pay any tax on a grant.
• Bonuses – Some states offer additional perks to filmmakers. Such as for using specific locations, local business, or hiring local staff.

Film Incentives – State by State

Below is a list of most of the states that have some type of film incentive program. Please note that programs are always changing. Many states have added to, or tweaked, their incentives for 2023.

Governor Gavin Newsom’s proposed 2023-24 state budget extends funding for California’s Film and TV Tax Credit Program an additional five years (through fiscal 2030-31) and proposes to make credits refundable for the first time since the state launched its incentive in 2009. The cap remains 20-25% for all crew, depending on the budget. A minimum of 75% of total “principal photography” days must occur wholly in California.

California Tax Credit Program offers bonuses based on the project’s job ratio. These are judged in three different categories that may not be combined: out-of-zone filming, visual effects, and music scoring / track recording labor.

Out-of-Zone Filming Bonus: Determined by the percentage of principle photography days outside of the Los Angeles 30-Mile Zone.

Visual Effects Bonus: Based on services performed in-state. There is no minimum spend requirement.

Music Scoring / Track Recording Labor Bonus: Based on wages paid to scoring musicians and contractors employed solely for the purposes of recording music for the project.

Colorado

Before the pandemic, the Colorado legislature was granting as little as $750,000 a year to the state’s film incentive fund. After lagging behind for so long when it comes to providing film incentives, the Colorado legislature bumped up their film incentive fund in 2023 to $11.25 million.

All production types are eligible for these film industry tax incentives except talk shows, post-only shows, and game shows. However, the only caveat is that 50% of the crew base should consist of Colorado residents to be eligible for the film tax rebate.

Connecticut

All project types are eligible for Connecticut film tax credit, including game shows, talk shows, and reality TV. However, the production company must spend at least $100,000 in the state.

The tax credit the company receives depends on how much they spend in Connecticut. For example, they get a 10% tax credit if their qualifying expenses are between $100,000 and $500,000; 15% for qualifying production expenses up to $1 million; and 30% tax credit if qualifying production expenses exceed $1 million.

Georgia

Georgia’s tax credits continue to be some of the best in the nation. Although a bill to limit tax film credits at $900 million annually was introduced to the legislature in 2022, it failed to pass. Legislators cited concerns of losing film industry business over changes to the current incentive programs.

All projects get a 20% spend. However, they are awarded an additional 10% if they include the made-in Georgia logo in the film’s opening and links to the Georgia website on the project’s landing page.

Illinois

Illinois film incentives include a 30% transferable tax credit on qualified expenditures incurred in the state. Production houses will receive an additional 15% production incentive if they hire individuals from economically disadvantaged areas, where the rate of unemployment is at least 150% of Illinois’s unemployment rate.

Qualified expenditures include tangible, personal property and services purchased from Illinois vendors, and compensation paid to Illinois resident employees.

The new law also expands the program to a $500,000 cap on qualified resident and non-resident wages(for a television series, qualifying non-resident wages are limited to the entire season).

Indiana

In 2022, Indiana created the state’s first film tax credit program. The Film and Media Tax Credit offers an income tax credit of up to 30% that can be applied to offset certain production expenses, such as acquisitions, filming and sound, labor, and story rights. Additionally, production crews and talent staying in the state for 30 consecutive days or more may be exempt from the County Innkeeper’s Tax, further incentivizing Indiana as a production destination.

Kentucky

The Commonwealth of Kentucky has revised guidelines for its film incentives program, returning it to refundable credits that were scaled back in 2018. Although the funding cap was reduced from $100 million to $75 million, the state offers a refundable 30-35% tax credit. With the new guidebook, individual projects are capped at $10 million in a calendar year, and a production company can qualify for incentives on a maximum of four projects a year. However, qualified expenditures must be made from businesses within the state.

Louisiana

Attempts to both scale back and extend the life of the tax credit in 2022 failed in the state legislature, leaving the status quo in place. Louisiana continues to offer productions with up to a 40% tax credit on eligible expenditures. All production types are eligible for the Louisiana film tax credits, including reality shows, video games, and commercials. However, the production company should spend at least 25% of its budget in Louisiana.

Maryland

Since inception of the Film Production Activity Tax Credit program in 2011, Maryland has incentivized major productions that employed thousands of residents, utilized thousands of local small businesses, and generated an economic impact of nearly $1 billion in the state. Scripted television, feature films, pilots, and commercials are eligible for film tax credit in Maryland. However, 50% of the principal photography must be in the state to receive the tax breaks.

Massachusetts

Massachusetts provides filmmakers with a highly competitive package of tax incentives: a 25% production credit, a 25% payroll credit, and a sales tax exemption. Animations, commercials, documentaries, pilots, feature films, reality TV, and scripted television are eligible for film tax credit in the state. Game shows, talk shows, and video games are not eligible. Production companies must spend 25% of their budget in the state to receive the film production tax credits.

Minnesota

Minnesota started offering a transferable tax credit for film and TV production in 2022. The rebate reimburses up to 25% of eligible production expenditures. All production types are eligible in Minnesota for incentives, except for game shows, talk shows, and video games. In 2023, productions applying for Minnesota’s Film Production Tax Credit will be eligible for more credit than previously offered because the compensation cap for above-the-line wages is increasing from $100,000 to $500,000.

Mississippi

All production types are eligible for Mississippi film incentives except for game shows and talk shows. Qualified expenditures include production costs paid to Mississippi vendors and companies.

Local residents earn a 30% tax incentive, and local veterans get an additional 5%. All non-residents earn 25%. However, a prerequisite is that at least 20% of the production crew must be residents of Mississippi.

Montana

The power of film incentives was on display for every producer to see when Yellowstone, the hugely successful Paramount Network series starring Kevin Costner, stopped filming in Utah in 2021 and moved to Montana due to better incentives. Animation, commercials, feature films, pilots, scripted television, and video games are all eligible for the tax credit. Documentaries, reality television, game shows, and talk shows are not eligible. To qualify, 50% of all principal photography must take place in the state.

A 5% extra tax incentive is given if the production company uses “Film Montana” on the screen credits.

Nebraska

Nebraska dipped their toe into the water on film incentives back in 2021. The program set aside $1 million for incentives for feature films shot on location in Nebraska and tell a Nebraska story. Feature films are the only projects eligible. Films must use Nebraska workers, and spend at least $1 million filming in the state, to qualify for the grants.

Film and TV production spending in New Jersey topped $650 million in 2022, reflecting the Garden State’s efforts to woo Hollywood productions with incentives. Lionsgate and Netflix have both recently announced large studio production facilities coming to the state and will soon join the 29 studios already in New Jersey. Under the film tax break program, the state compensates producers 30% of qualified digital media production expenses, or 35% of qualified digital media production expenses incurred for filming scenes in New Jersey and buying in-state goods.

The state’s also offers a Diversity Tax Credit Bonus of 2% or 4% for plans to hire women and minorities for key creative positions and production crews.

New Mexico

New Mexico film industry had another record year in 2022 with a direct spend of $855.4 million to the state and a record 109 productions… largely due to production tax incentives. One of the first states in the U.S. to offer incentives to the industry, New Mexico offers a refundable tax credit of 25% for spending on state film crews, goods, services and other eligible expenses. The rate can be as high as 35%, depending on where it’s filmed, among other factors.

The 25% tax incentive is also applicable to nonresident talent, given certain criteria are met. New Mexico does not have a minimum spend and all production types are eligible, which makes it even more attractive to independent productions.

New York

Production companies may be eligible to receive a fully refundable credit of 25 percent of qualified production costs and post-production costs incurred in the state. There is a maximum of $5 million per year that can be allocated for the additional 10% credit on qualified labor expenses. The New York Commercial production incentive allows for online commercials to qualify as well, a boon for branded content companies.

North Carolina

North Carolina has a strong history with the entertainment industry with incentive programs dating back to 2014. However, the program is evolving as the 2023 state budget adjusts the financial qualifications TV and film projects must meet in order to receive financial incentives from the state.

North Carolina has reduced minimum spend requirements for tv and movie projects and increased their spending caps with close to $30 million available in funding. The 25% rebate is available for “qualifying expenses and purchases made by productions while in-state.”

Oklahoma

In July of 2021, the state launched a new film incentive program that’s nearly quadruple the size of its current program. It’s part of a vision by lawmakers to turn the Sooner State into a production powerhouse. The program offers film and TV productions up to a 38% rebate on money they spend in Oklahoma.

Oklahoma’s base cash rebate is 20% and productions can increase the amount with boosts meant to spur long-term investment in the state. For example, there’s a 2% bonus for TV pilots and a 5% bonus for a full TV series season. There’s also a 5% boost for production companies that commit to making three films in three years. There’s an additional boost as well for filming in rural Oklahoma or a soundstage as well as doing post production work in the state.

Oregon

The Oregon Office of Film and Video sets itself apart through its commitment to a more inclusive, diverse film and entertainment industry. The office is championing initiatives in affirmative action and DEI, environmentally-conscious content creation and equitable hiring practices. They offer qualifying film or television productions a 16% cash rebate to in-state residents and a 10% cash rebate to non-residents. The state also offers two bonus programs under their Oregon Production Investment Fund:

Within the Portland Metro Area: Allows a reimbursement of up to $200/day for each person traveling to or being put up at a different location. This has a project cap of $50,000.

Outside the Portland Metro Area: Allows for an additional 10% to be added to the project’s overall award.

Tennessee

Tennessee offers productions a cash rebate in the form of a 25% grant on all Tennessee labor, production services and music for qualified, in-state expenditures. Qualified expenditures include pre-production, production, and post-production costs incurred in the state. As an interesting side note, companies must post a notice in local newspapers where the filming took place after principal photography, telling the public of the need to file creditor claims.

Texas

While many TV shows and films set in the Lone Star State are not actually filmed there because surrounding states offer more attractive incentives, Texas is trying to change the narrative. If the new bill, introduced in the Texas state legislature on March 7, is passed, productions will be eligible for 30 to 42.5% tax credits on in-state spending with no cap. That’s a significant increase from the existing incentive program, where film and TV projects may qualify for a cash grant of only 5% to 22.5% of eligible spending. Qualified expenditures include payments made to Texas companies for goods and services directly used or related to production.

Utah

While the state did lose Yellowstone to Montana because of film incentives, Utah has a solid incentive program. The Motion Picture Incentive Program (MPIP) is a 20% to 25% incentive that offers a cash rebate or fully refundable, non-transferable tax credit on qualified dollars left in the state of Utah. Narrative, documentary, and episodic series that intend to be distributed commercially are eligible.

Utah also offers the Community Film Incentive Program (CFIP), a 20% cash rebate specifically for projects that originate in Utah with budgets between $100,000 – $500,000. The CFIP is designed as a platform to foster new and up-and-coming local filmmakers and productions.

Virginia

Virginia has two different incentive funds – the Motion Picture Opportunity Fund provides grants, and the Virginia Motion Picture Tax Credit Fund provides refundable tax credits. To be eligible for the tax credit, a production company must shoot at least 50% of principal photography in the state and spend at least $250,000 in qualifying expenses in Virginia. There is no minimum spend for the grant program.

Qualified expenditure for the incentives includes expenses made in Virginia in the form of services or products, including leased products.

Washington

Washington has continued its dedication to developing entertainment production this year with a budget increase to their Motion Picture Competitive Program. In 2022, they increased the amount of film tax credits that could be awarded annually from $3.5 million to $15 million. This program also expands incentives for projects filming in rural jurisdictions, projects that tell stories of marginalized communities and projects created by people from marginalized communities.

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