Film Tax Credits

Movie production incentives, commonly known as “Film tax credits” are tax benefits offered on a state-by-state basis throughout the United States to encourage in-state film production.  Currently offered in fifteen states, these incentives came about in the 1990s in response to the flight of movie productions to other countries such as Canada. In the last ten years, states have offered increasingly competitive incentives to lure productions away from other states.

The structure, type, and size of the film tax credit incentives varies from state to state.  Many include tax credits and exemptions, and other incentive packages include cash grants, fee-free locations, or other perks. The film tax credit programs are designed to create increased economic activity and job creation in the markets they serve.

How they work:

Tax Credits remove a portion of the income tax owed to the state by the production company. Production companies must often meet minimum spending requirements to be eligible for the credit.  Almost all states that offer tax credits make them either transferable or refundable. Transferable credits allow production companies that generate tax credits greater than their tax liability to sell those credits to other taxpayers, who then use them to reduce or eliminate their own tax liability.