Production Incentives Updates You Should Know About!

By Kathleen Thompson  | 

Production incentives play an increasingly important role in determining locations where motion picture and television productions are filmed.

Our team helps facilitate a seamless production incentives process by offering consulting and ensuring that your talent and crew get properly paid.

We know that incentives programs are subject to fast moving developments and that many elements go into location decisions. That’s exactly why we’ve created an update covering the latest production incentives updates for 12 states plus Puerto Rico.

Curious to know which states are minimizing or ending incentives and where they are increasing? Read on…

 

California
Great news!  On July 22, Governor Newsom signed a bill that provides a $330 million “booster shot” for the film and TV tax credit program, far in excess of Governor Newsom’s initial proposal of $30 million. With the signing of this bill, CA can start distributing $180 million over two years.  $150 million is to be used for the construction of new soundstages.

 

Georgia
Last week the Georgia Department Of Revenue (GADOR) posted the new Agreed Upon Procedures. The document contains critical new information including specific documents now required and vendor qualification. It is also important to note that qualifying costs related to COVID are due to expire on August 1, 2021. However, an extension has been requested by our industry and is currently under review by the Georgia Department of Revenue DOR.  As a reminder, effective this year, GADOR requires an audit of film tax credits before the film tax credits can be utilized. The audit can be performed by the State or an independent CPA certified by Georgia. Audit fees are on a sliding scale determined by Georgia production costs. Georgia Fun Fact: Georgia’s Film and Television Industry added $4 billion to the state’s economy during the global pandemic.  Wow!

 

Kentucky
Beginning January 1, 2022, Kentucky’s tax credit will become refundable so no taxable income is needed to earn the tax credit. Formerly, this credit was non-transferable and non-refundable which made it difficult to access.  Annual funding under this program will be $75 million per year. Good news for the industry!

 

Louisiana
Louisiana, the state that set off the explosion of domestic film incentives, has declined to extend their incentive program. This would have been inconceivable prior to 2015 when the program went from having no annual funding cap, to a cap of $180M.  For many years, Louisiana was deemed “Hollywood South” because of its solid incentive program. Unless it can be saved, it will expire on June 30, 2025.

 

Maine
A bill to increase Maine’s film incentive has been postponed until the Legislature’s next session. We will keep our fingers crossed!

 

Massachusetts
After initially being targeted for reduction, the Massachusetts film tax credit has, once again, escaped being trimmed. The only substantive change is an increase in the minimum spend in Massachusetts from 50% to 75% of the production budget. Also, the sunset date has been eliminated thus making the film tax credit “permanent.”

 

Minnesota
The Minnesota House and Senate reached a deal to create a new $5 million per year tax credit for film and TV production in the state and the bill has been signed by the Governor. The incentive will be 25% of eligible expenditures. This is a first for Minnesota which until now has had a rebate program with inconsistent funding. The new tax credit became effective July 1, 2021.

 

Oklahoma
Oklahoma has passed a new film enhancement rebate program that replaced the previous $8 million annual cap with an increased annual cap of $30 million. Click here for FAQ’s on the new program. The base tax credit is 20% (up to 38% with uplifts) with an (up to) 5% bonus for a TV series that is filmed for one or more seasons and an (up to) 5% bonus for production companies that commit to three features in three years. The new tax incentive became effective July 1, 2021.

 

Oregon
Effective for 2022, applicants for the Oregon Film Incentive Fund (OPIF) must have a written diversity, equity, and inclusion policy and make good faith efforts to hire those from underrepresented groups. Additionally, applicants for the incentive must report diversity statistics and establish a process for addressing claims of harassment, discrimination and other misconduct.  The OPIF has increased from $14,000,000 to $20,000,000.

 

Pennsylvania
Once again, efforts to increase the Pennsylvania film tax credit’s annual cap have failed. The current cap is $70 million, substantially lower than the proposal of $125 million. Note that HBO’s incredibly popular series “Mare of Easttown” (that has 16 Emmy nominations!) was filmed in several Philly-area locations. We’ll keep our hopes high for the cap to be raised next year!

 

Puerto Rico
The Department of Economic Development and Commerce’s Film Industry Development Program had already assigned the full $38 million in tax credits available for Fiscal Year 2022 to just four productions, before the start of the year on July 1. The situation has surprised local industry executives and drawn the attention of the Puerto Rico Senate.

 

Washington
Washington has dropped three Funding Assistance requirements: that a Washington resident must hold the position of director, producer, or screenwriter; that 75% of the paid labor force be Washington residents; and that 85% of all production days must take place in Washington State. These changes open up the Washington film incentive to many more productions.

The information in this blog post is provided for general information and discussion only, and should not be construed or relied upon as legal or tax advice with respect to any matter.

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