New State Incentives for Film and Television

When will the states stop trying to out do each other to get your business?

A majority of the states provide state tax credits, refunds and other incentives for film production in their states. New Mexico has led the field for a long time with a 25% rebate incentive on all qualified expenses paid in the state. New Mexico studies have shown that the return on its investment spent on rebates paid shows a return of 10 to 1, that is $10 of revenue for every dollar paid in state rebates goes to businesses in New Mexico which produces other revenue to that state. Quite impressive! Over the last few months, several states have passed legislation to become major players in the film production incentives business.

Wisconsin has a 25% refundable state tax credit. A Wisconsin based theatre chain will consider booking films meeting their standards, which is tantamount to a guaranteed distribution opportunity. Any Wisconsin tax credit given to the production company which is not used, will be refunded in cash to the production company. Typically, a production company would owe little or no tax to Wisconsin, which can be very beneficial to investors. For more information, see www.filmwisconsin.net.

New York State has just tripled their state incentive from 10% to 30% refundable credits on qualified expenses with an additional New York City incentive of 5%. This amounts to a cash refund to the production company on any unused state tax credit. For more information, see www.ny.gov/govenor/press/press_0423081.html.

Alaska just passed a transferrable tax credit incentive of 30% tax credit with an additional 10% for wages paid to Alaskan residents. This tax credit has not yet been signed into law by its Governor. For more information, see www.alaskafilmgroup.org.

Michigan may have the most impressive new film and television incentive package. It is a 40% refundable tax credit. This means that any state tax credit given to the production company which is not used by the production company, will be rebated in cash to the production company. This is tantamount to a rebate of 40% of each dollar spent in Michigan on qualifying costs. Another 2% is available by spending in certain designated areas. The most interesting part is that talent can come from out-of-state and such talent still qualifies as a qualifying cost up to a maximum of $2 million dollars in compensation for each such person. For more information, see www.michiganfilmproduction.com.

It appears that other states will try to provide better incentives for filmmakers to help convince them to film in their states. The return on investment to the state seems substantial enough so that granting incentives is not much of a business risk for any state. This is a fluid situation. Our comments above are general in nature. Each production is unique and opportunities need to be carefully considered.