Adam Shaw, CFP®
Vice President, Media Society
Best State Tax Incentives
These five states currently offer the most lucrative tax breaks for movie productions.
Louisiana currently offers a 30 percent creditable base rate and an additional 10 percent payroll credit if you use in-state labor during the production. Additionally, Louisiana’s minimum qualifying spending threshold is only $300,000, one of the lowest in the country.
Georgia offers a tax credit incentive that will cover up to 30 percent of your production. Up to 20 percent of expenses can be transferred as a base rate, with an additional 10 percent allowance if you include a Georgia logo and promotions for Georgia’s tourism website in your production and promotional material.
Massachusetts’ tax credit is a bit lower, with a 25 percent production credit and a 25 percent payroll credit. To qualify for the payroll credit, you must spend at least $50,000 in state. The production credit requires that you spend at least 50 percent of your total production budget in state or that at least 50 percent of filming days occur in state. If you qualify for the production credit, the state will waive its sales tax on all production-related purchases.
Pennsylvania offers one of the simplest tax incentive programs, with a clear-cut 25 percent tax credit for productions that spend at least 60 percent of their production budget in-state.
5) Puerto Rico
Puerto Rico’s tax incentives are some of the most complicated, but are potentially very lucrative. Productions are eligible for a 40 percent tax credit on money paid to in-state companies and individuals, with a $50 million cap that can be waived in certain circumstances. Puerto Rico offers an additional 20 percent credit on payroll for out-of-state “above the line” personnel and a 25 percent infrastructure credit for qualifying infrastructure projects.
Worst State Tax Incentives
Nearly a dozen states offer no incentives at all, but these five states have the worst programs among the states that do offer incentives.
1) District of Columbia
At first glance, D.C.’s incentive program is respectable, with a potential 20 to 40 percent credit for in-state expenditures and only a $250,000 minimum spend. However, the program is notoriously fickle, since each production requires individual review to qualify for incentives, and the entire program is frequently threatened with cancellation.
Tennessee has jettisoned its tax credit system entirely in favor of a new regime that only offers a 25 percent grant program for money spent on in-state residents and vendors, with a $250,000 cap per resident paid. Productions must spend at least $200,000 in state to qualify.
3) North Carolina
North Carolina also operates with a grant system of up to 25 percent, but qualifying for it is an open-ended question, as productions are evaluated on a case-by-case basis. The program is only allocated $10 million to disburse each year, and film productions are capped at $5 million in total grants.
Colorado’s program offers a respectable 20 percent cash rebate on in-state expenditures, but the qualifying stipulations are notably strict. Credits are limited to the first $1 million of any individual’s salary, and productions must spend at least $1 million in state to qualify. Additionally, 50 percent of the production’s workforce must consist of in-state residents, and the entire program is limited to $5 million in total rebates per year.
Maine offers a 12 percent rebate for in-state resident production wages and 10 percent for non-resident wages, capped at $50,000 per person. Productions must spend at least $75,000 in-state to qualify.
With millions on the table, choosing a lucrative state as you get funding for a film can be the difference between a massive windfall and a movie funding horror story.