15 Best US States for Film Production Tax Breaks: A Comprehensive Guide
The film industry has become a significant contributor to the economy in various states across the United States. To attract filmmakers and boost local employment, states have started to offer lucrative tax breaks and incentives. As a result, many movie producers and other industry professionals have moved productions out of Hollywood and into these enticing destinations.
In this article, we will discuss the top 15 states that offer the best film production tax breaks. By understanding the advantages of each state, filmmakers can make informed decisions on where to produce their projects while maximizing the benefits of these lucrative incentives. These tax breaks not only foster growth in the film industry but also positively impact local economies and job markets.
From sprawling landscapes to bustling cities, numerous locations across the United States are vying for a piece of the film industry pie. The list of 15 states to be discussed in this article will provide an insightful overview of the most favorable environments for film production in today's competitive landscape.
Top 5 States for Film Production Tax Breaks
Georgia
Georgia is a top destination for film production, offering a competitive 20% tax credit for qualified productions, with an additional 10% for including the state's promotional logo. This attractive incentive has led to many high-profile projects being filmed in Georgia, such as Marvel movies and popular TV shows like The Walking Dead.
New York
New York boasts a generous film production tax credit program, providing a refundable tax credit of up to 30% on qualified expenses. The state offers additional benefits for post-production work, with tax credits reaching 35% for projects completed upstate. New York City continues to be an iconic filming location, drawing filmmakers with its diverse settings and talented local crews.
California
California's film production tax credit program offers a 20% to 25% tax credit for qualified productions. Known for its iconic Hollywood film industry, California remains a prime destination for filmmakers, with ample resources and a rich history of filmmaking. The revamped tax credit program aims to keep productions within the state and maintain its status as a global entertainment hub.
Louisiana
Louisiana offers a 25% tax credit on eligible production expenses, with an additional 10% for utilizing local labor. The state's diverse landscapes and vibrant cultural heritage make it an appealing backdrop for film projects, leading to the rise of "Hollywood South." Louisiana's robust tax credit program has attracted productions like True Detective and 12 Years a Slave.
Massachusetts
Massachusetts provides a 25% tax credit on qualifying production expenses, with an additional sales tax exemption on a broad range of items. The state's rich history, scenic coastline, and prominent academic institutions make it a popular destination for filmmakers. Home to films like Good Will Hunting and Spotlight, Massachusetts remains an attractive option for productions seeking tax incentives.
Additional 5 States with Notable Tax Breaks
New Mexico
New Mexico offers a competitive 25% refundable tax credit on qualified film production expenses, with an additional 5% for TV series with an order of six episodes or more. Moreover, an annual film production tax credit cap of $110 million further encourages filmmakers to choose this location.
Pennsylvania
Pennsylvania provides a 25% Film Production Tax Credit (FPTC) for qualified expenses, and if at least 60% of the budget is spent on local resources, the tax credit increases to 30%. The state also has a $70 million annual cap for the FPTC, which aids in attracting productions.
Illinois
Film and television production companies in Illinois can benefit from a 30% tax credit on qualified expenditures, and an additional 15% tax credit for hiring residents from economically disadvantaged areas. The state has no annual cap on the tax credits, which makes it an attractive location for filmmakers.
Texas
The Texas Moving Image Industry Incentive Program offers up to a 22.5% cash grant on qualified in-state spending and a 10% bonus for underutilized or economically distressed areas. The program has a $50 million biennium cap, enticing productions to consider Texas as a shooting location.
Connecticut
Connecticut provides a 10-30% tax credit based on the type and scale of production. For qualified expenses under $100,000, the credit is 10%; for expenses between $100,000 and $500,000, the credit is 15%; and for expenses over $500,000, the credit is 30%. This tiered structure allows for a range of productions to take advantage of the state's incentives.
Incentive Types and Eligibility
When it comes to film production tax breaks, there are three primary incentive types: Tax Credits, Rebates, and Grants. Each incentive has its own eligibility criteria and benefits, and they are designed to help productions save on costs and encourage economic growth within the state.
Tax Credits
Tax credits are a type of monetary incentive that allows film productions to offset a percentage of their qualified expenses against their tax liability. These can be either refundable or non-refundable:
Refundable tax credits allow filmmakers to receive a cash refund for any unused portion of the credit after all tax liabilities have been met.
Non-refundable tax credits can only be used to offset a production's tax liabilities and cannot be exchanged for cash if the amount of tax owed is less than the credit value.
Eligibility for tax credits typically depends on factors such as:
The production type (e.g., feature film, television series, commercial)
The minimum budget or spending requirement within the state
The employment of local residents in both on-screen and behind-the-scenes roles
The utilization of in-state facilities and vendors
Rebates
Rebates are a reimbursement method, in which a percentage of qualifying production expenditures is returned to the filmmaker once the production has been completed and upon submission of required documentation. Rebates are generally paid in cash, making them more immediate and tangible for filmmakers.
In most cases, eligibility for rebates requires the fulfillment of a predetermined set of criteria, such as:
Meeting a minimum in-state spending threshold
Hiring a specific number of local crew members
Shooting a certain percentage of the production on location in the state
Submitting thorough documentation of all eligible expenses
Grants
Grants are another form of financial support for film productions. Unlike tax credits and rebates, grants often come as a direct cash payment, which can be used for various production purposes, including:
Hiring cast and crew
Paying for location fees
Purchasing equipment and props
Covering post-production costs
To be eligible for a grant, productions must meet specific criteria, which will vary from state to state. Generally, these may include:
Demonstrating meaningful economic impact within the state
Contributing to the advancement of the local film industry
Providing educational and workforce development opportunities for local residents
While grants may be more challenging to secure than tax credits or rebates, their flexible application makes them an appealing option for many film productions.
Indirect Benefits and Support
There are various indirect benefits and support that states offer to filmmakers beyond just tax breaks. These may include workforce development programs, financial assistance, and local industry partnerships.
One essential aspect is workforce development programs. These programs help nurture and train local talent, both in front of and behind the camera. A well-trained and experienced local crew ensures high-quality productions while reducing reliance on outside resources.
Another vital support provided by several states is financial assistance. This can take the form of loans, grants, or other types of funding for film projects. Such assistance helps filmmakers, especially independent ones, in bringing their visions to life without the financial burdens typically associated with the industry.
Additionally, states often encourage local industry partnerships by connecting filmmaking professionals with local businesses and services. These partnerships not only create business opportunities but also foster a vibrant and sustainable film industry within the state.
In conclusion, the indirect benefits and support offered by states contribute significantly to their attractiveness as film production destinations. Beyond tax breaks, workforce development programs, financial support, and local industry partnerships ultimately help filmmakers create better productions while fostering growth and sustainability in the local film industry.
Factors to Consider in Choosing a State
When selecting a state for film production, several factors should be taken into consideration. These factors can significantly impact the success and overall cost of a project.
Tax Credits and Incentives: States offer different types and amounts of tax breaks to filmmakers. Some states provide refundable tax credits, while others offer transferable or non-refundable tax credits. It is crucial to understand each state's specific incentives and choose the one that best fits the production's budget and needs.
Labor Availability and Costs: States vary in their availability of qualified local crew members for film productions. Having a large pool of skilled professionals can lead to lower labor costs by reducing the need to fly in crew members from out of state. Additionally, specific states may have labor unions with varying rates and agreements that can also affect production costs.
Locations and Accessibility: The attractiveness and accessibility of various filming locations within a state can play a big role in the decision-making process. States known for their diverse landscapes and easily accessible urban areas offer a range of settings that can cater to different film genres. The proximity to major transportation hubs, such as airports and highways, can further enhance a state's appeal for film productions.
Climate and Weather: A state's climate and weather patterns are crucial factors when planning a shoot, especially for outdoor scenes. Productions may lean towards states with predictable weather patterns, mild climates, and long daylight hours to ensure that there are fewer disruptions or delays in filming.
Permitting and Regulations: The ease of obtaining film permits, as well as the costs associated with them, can impact a production's overall budget and timeline. States with streamlined permitting processes, lower fees, and more flexible regulations can make the filming experience smoother and less costly.
In conclusion, carefully considering the tax breaks, available workforce, location options, climate, and permitting processes of each state can significantly impact the success and financial viability of a film production.
The Future of Film Production Tax Breaks
In the coming years, it is likely that film production tax breaks will continue to be a significant factor in determining where productions choose to shoot. As more states recognize the economic benefits of attracting film and television projects, competition for these productions is expected to increase. This may lead to even more lucrative incentives and comprehensive tax break packages offered by states.
Additionally, technological advancements will also play a role in the future of film production tax breaks. For example, virtual production techniques, which allow filmmakers to create realistic environments and collaborate remotely, may reduce the need for location-based incentives. However, states can still entice productions by providing tax breaks for investments in these new technologies and supporting local technology-based businesses involved in the film industry.
Furthermore, the success of a state's film production tax break program often relies on strategic partnerships with various entities, such as film commissions, tourism boards, and private organizations. Ensuring that these partnerships continue to thrive will help maintain and expand tax breaks in the future. Some important elements of these collaborations may include:
Communication: Open and clear communication between entities will be vital to ensuring the success of tax break programs.
Flexibility: As the landscape of the film industry evolves, so should the approach to tax breaks, requiring adaptation and openness to change.
Investment: Continued investment in infrastructure, workforce development, and other areas will be necessary to sustain and grow a state's film industry.
In conclusion, the future of film production tax breaks is dynamic and ever-changing. States that are able to remain competitive by offering enticing packages, adapting to new technologies, and maintaining strong collaborations will be well-positioned to attract film and television projects for years to come.
