Film Tax Credits: How to Save Money for Your Project

Film Tax Credits: How to Save Money for Your Project

How do film tax credits work anyway?

Also known as movie production incentives, they are tax benefits offered on a state by state basis throughout the United States to encourage in-state film production. Brought about in the 1990s, the state programs were a response to Canada film tax credit incentives.

The idea behind a film tax credit is pretty simple: by moving production to a state, you’ll be able to save money on taxes owed, or get some other perks in exchange for shooting on location there. Of course you may have to use a certain amount of local vendors to qualify, but every offer is different.

FILM TAX CREDITS: HOW TO SAVE MONEY FOR YOUR PROJECT

Why do states offer film tax credits? They must be crazy

Supporters of film tax credits argue that Hollywood film production stimulates the state economy by creating jobs and increasing shop revenue in a multiplier effect.

By giving up tax revenue, states gamble that they’ll see more economy activity that they’ll make up the tax revenue in droves. Shooting locations can later become tourist spots.

Whether or not film tax credits actually work, however, is up for debate. A study covered by Variety called it a giant waste of money.

So filmmakers, get ‘em while they’re hot.

FILM TAX CREDITS: HOW TO SAVE MONEY FOR YOUR PROJECT

What are the different types of film tax credits?

Film tax credit programs vary by state-to-state (more on that in a second), but the most common types of film tax credits are:

1. Movie Production Incentives: can refer to any number of film tax credit programs, spending incentives, and perks the state offers. Think of it as a catch-all term.
2. Film Tax Credits: cover a portion of income tax a production company would owe to the state.
3. Cash Rebates: are percentages of a production company’s spending, distributed to production companies after the shoot.
4. Grants: are given to production companies before production starts. They can be award-based, or mandated based the content of the project.
5. Sales Tax Exemptions: cover a portion of in-state spending by a production company, kicking in with a minimum number of spending.
6. Lodging Exemptions: cover a portion of in-state hotel spending taxes. It usually applies to all members of the film shoot residing over 30 days in-state.
7. Fee-Free Locations: are state-owned locales that production companies can shoot at for no charge.

Each state’s movie production incentives are different, and not every state offers them...

FILM TAX CREDITS: HOW TO SAVE MONEY FOR YOUR PROJECT

What are California tax credit incentives?

California tax credits include:

• 20 percent tax credit on a feature film with a budget of $1-75 million or a miniseries with a $500,000 minimum budget
• 25 percent tax credit for a TV series moving production from an existing state to CA. Budget: $1-10 million
• 75 percent of production and/or budget in CA to qualify

FILM TAX CREDITS: HOW TO SAVE MONEY FOR YOUR PROJECT

What are Louisiana tax credit incentives?

New Orleans film tax credits are pretty sweet:

• $300,000 minimum spending to qualify
• 30 percent tax credit for in-state spending. 15 percent to 45 percent bonus if the shooting script is optioned by a Louisiana production company
• Extra 15 percent tax credit for the first million dollars of Louisiana resident payroll

FILM TAX CREDITS: HOW TO SAVE MONEY FOR YOUR PROJECT

What are New York tax credit incentives?

New York film tax credits include:

• 30 percent tax credit with a cap of $420 million per fiscal year
• Extra 10 percent for upstate spending, limited to $5 million
• Feature films and television production under $15 million qualifies if one shoot day occurs on a set built in New York in a qualified production facility

FILM TAX CREDITS: HOW TO SAVE MONEY FOR YOUR PROJECT

What are Massachusetts tax credit incentives?

Massachusetts film tax credits include:

• $50,000 minimum
• No production cap
• 25 percent tax credit that can be carried over for 5 years

FILM TAX CREDITS: HOW TO SAVE MONEY FOR YOUR PROJECT

What are Georgia tax credit incentives?

With Marvel Studios, and countless other major studios flocking to Atlanta, Georgia is one of the best place for filming.

Atlanta tax credits include:

• 20% transferable tax credit
• Additional 10% if you include the 'Made in Georgia' promotional logo in the film credits.
• $500,000 minimum spending on a single or many projects in one fiscal year

Up Next

The Producer’s Guide to Film Production Insurance

Film production tax credits are a great way to save money on your production, as getting the right insurance policy for your project.

Entertainment tax law isn’t exactly fun, but saving money is always satisfying.

What states do you shoot in? Share your wisdom in the comments.

Up Next: The Producer’s Guide to Film Production Insurance →