Film Tax Incentives in the U.S.: A Beginners’ Guide

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Highlights

  • Filmmakers can significantly reduce production costs by taking advantage of film tax incentives offered by various states.
  • To maximize the benefits, filmmakers should research the specific programs offered by each state and ensure they meet the eligibility requirements.
  • At Entertainment Managed Services, we help you navigate film tax incentives to maximize your budget for your next production. Contact us to get started!

Making a movie is an exciting, collaborative effort, but navigating film production budgets can be daunting. Here’s the good news: Film tax incentives can offer serious savings on production costs.

This guide gives you an overview of the various types of incentives available across the U.S., how they work, and how you can best utilize them for your film production.

Let’s dive in!

Tax Credits Allow Productions to Recoup a Percentage of Specified Expenses.

Introduction to Film Tax Incentives

Film tax incentives are financial rewards offered by states (and sometimes countries) to attract filmmakers to shoot their movies within their borders.

The main goal of these financial incentives is to boost local economies. By having film productions shoot in their state, they create jobs for local crew members, rent out local facilities, and boost spending on local businesses like hotels and restaurants.

Shows such as AMC’s “Breaking Bad,” filmed in New Mexico, have brought significant economic benefits to their filming locations, from increased tourism to job creation.

Film tax incentives can significantly reduce production costs, making your film more competitive, and opening doors to explore unique locations within your budget.

Types of Film Tax Incentives

The main types of film tax incentives include:

1. Tax Credits: These can be cashable or transferrable and allow productions to recoup a percentage of specified expenses.

2. Rebates: Cash refunds provided after the expense has occurred, typically calculated as a percentage of the qualifying expenditures within that state.

3. Exemptions: These may include sales tax exemptions on production-related expenses such as equipment rentals and purchases.

4. Grants: Fixed amounts of money awarded to productions, often with specific cultural or economic criteria.

Each type of incentive targets different aspects of production costs and benefits.

State-by-State Film Tax Incentive Programs

Film tax incentives vary greatly by state, influencing where a production chooses to shoot.

Here are a few examples:

  • Georgia: Offers up to 30% in tax credits, including a base of 20% plus an additional 10% for including a promotional logo in the film.
  • California: As one of the top destinations for film production in the U.S., California provides tax credits based on job creation, with a maximum of 30%.
  • New Mexico: This state offers filmmakers a refundable tax credit of 25% to 40% on qualified in-state spending, with additional incentives for TV series, qualified facilities, and filming outside major cities.
  • Louisiana: Filmmakers can apply for a refundable tax credit of up to 40% on qualified in-state spending, with bonuses for Louisiana screenplays and filming outside New Orleans.

As the film industry evolves, so too do the structures of incentives. States are continually reassessing and modifying their incentives to stay competitive. For instance, some states are now offering additional incentives for productions using green technologies or for developing permanent studios within the state.

Before planning your production, consult the specific incentives of each state to determine where you will get the most financial benefit.

Need help? Contact Entertainment Managed Services to see which state offers the biggest financial advantage for your film.

Maximizing the Benefits of Film Tax Incentives

To ensure you maximize film tax incentives, follow these steps:

1. Eligibility: Confirm that your production qualifies for the incentives in your chosen locale.

2. Documentation: Keep meticulous records of all qualifying expenditures. Inaccurate documentation can lead to delays or denials in receiving your benefits.

3. Local Resources: Use local labor and services as some states give higher incentives for using in-state businesses and crew.

4. Fill Out Applications and Registrations: Meet the application deadlines and make sure to submit all the necessary paperwork to the relevant state authorities. Each state might have a specific application process, so research and complete it thoroughly.

5. Stay Informed: Film tax incentives can change frequently. Stay updated on the latest regulations, application deadlines, and any modifications to incentive programs.

Partnering with an expert can simplify this process for you, helping you identify the best locations for your productions, ensure you follow application procedures properly, and keep you up to date with each state’s requirements.

Use Local Labor and Services as Some States Give Higher Incentives for Using In-State Businesses and Crew.

Unlock Big Savings: Find Your Perfect Film Tax Incentive

While the landscape of film tax incentives may seem complex, understanding the basics is crucial to financial planning for your film production. With these incentives, you can significantly decrease production costs and potentially make your project viable.

However, it’s always essential to stay updated with the latest information. Need help to navigate this territory effectively? At Entertainment Managed Services we help you take advantage of film tax incentives across various states of the U.S., while also supporting your business with accounting, payroll, and benefits administration services.

Ready to maximize your film budget? Contact us today to get started!


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