PRODUCTION TIPS: Production Incentives for the Low Budget Filmmaker
Production incentives are tax benefits provided by the states on state-by-state basis as a way to bring the film business to the states. These programs began as a response to Canada's cheap production incentives in the 90s that lured many film productions. As a result, the US states adopted progressively generous incentives to bring them back. Hollywood and government officials tend to be big boosters of the production incentive programs as they tout its effects in job growth and bringing in tourism. But many others have critiqued these incentive programs as failing to give states an economic boost and questioning their effectivenes, as some states benefit more than others.
Big budget studio filmmakers tend to be the ones who benefit most from production incentives since the majority of these benefits don't kick in until hundreds of thousands of dollars, at a minimum, have been spent. It's clear that production incentives were not made for the no to low budget indie filmmaker in mind. BUT there are a few states that do offer production incentives* within the spending range of a low budget filmmaker i.e. filmmakers spending from $25K to $100K. And, at the end of this list, you will even find a few states that offer incentives no matter what the budget.
$25,000 Production Incentives
- West Virginia
- "The West Virginia Film Industry Investment Act is a competitive tool used to recruit film industry business into the state. The Act provides up to 31% tax credits for in-state spend (27% base, plus 4% for 10 or more resident crew or talent hires). Funded at $5 million annually; no caps; minimum spend of $25,000. Eligible projects include feature length films, TV films and series, commercials, music videos, and commercial still photography. Please visit the following pages for guidelines, forms, and overview."
$50,000 Production Incentives
- "Documentaries and Broadway productions are eligible with an expenditure minimum of $50,000. Applications for film production incentives will be reviewed and approved by the Kentucky Film Office, Secretary of the Tourism, Arts and Heritage Cabinet, the Finance and Administration Cabinet and the Kentucky Tourism Development Finance Authority. "
- "Film producers are eligible for a 25 percent production credit, a 25 percent payroll credit, and a sales tax exemption. Any project that spends more than $50,000 in Massachusetts qualifies for the payroll credit. Spending more than 50 percent of total budget or filming at least 50 percent of the principal photography days in Massachusetts makes the project eligible for the production credit and a sales tax exemption. There are no annual or project caps, no residency requirements, and no extended schedule of credit payouts."
- "The Mississippi Motion Picture Incentive Program provides a cash rebate on eligible expenditures and payroll and provides sales and use tax reductions on eligible rentals/purchases. This program is available for nationally distributed motion pictures, television programs, DVDs, documentaries, short films, commercials, video games, including animation and production utilizing new technology. National distribution includes theatrical, broadcast, festival screening, streaming video, and Internet delivery. There is a $50,000 minimum Mississippi investment (local spend) per project. There is a $10 million per project rebate cap. There is a $20 million annual rebate cap. There is no minimum requirement for production days or percentage of production spend. Under the Mississippi Investment Rebate, a production is eligible for a 25 percent rebate on their base investment. Additionally, there is a 30 percent Resident Payroll Rebate and a 25 percent Non-Resident Payroll Rebate. A production is eligible for an additional 5 percent rebate on salaries paid to veterans. Qualifying production equipment used directly in the filming/editing of project will be taxed at a reduced rate of 1.5 percent."
- "The Oklahoma Film Enhancement Rebate offers up to 37% on Oklahoma expenditures to qualifying companies filming in the state capped at $5 million per year."
$75,000 Production Incentives
- "Applicants can qualify for up to 58 percent in a transferable tax credit on qualified production expenditures in Alaska. Eligible projects are broadly defined as film, documentary, commercials, and video projects. The state requires a minimum of $75,000 of qualified expenditures in Alaska, and there are no production or salary caps. Also, Alaska has no state sales or income tax."
- "Filmmakers can receive tax rebates equal to 12% of qualified wages paid to Maine residents working on a certified production and 10% of nonresident wages. Qualified wages capped at $50,000 per person. Claim a non refundable, non transferable tax credits equal to 5% of the non wage production expenses. Credit not to exceed the Maine taxes owed by the production company. *Must be claimed within production year. Productions may be considered for the FAME seed capital tax credit program. www.famemaine.com. Purchase fuel and electricity for productions and avoid almost all state energy taxes. Hotel/motel accommodations for cast and crew without paying state lodging tax if the stay is 28 days or more. No location fees for qualified productions filming on state land. Set up production offices using office furniture and equipment from state surplus."
- "The Oregon Production Investment Fund offers qualifying film or television productions a 20 percent cash rebate on production-related goods and services paid to Oregon vendors and a 10 percent cash rebate of wages paid for work done in Oregon including both Oregon and non-Oregon residents. The labor portion of this rebate can be combined with the Greenlight Oregon program for an effective labor rebate of 16.2 percent. A production must directly spend at least $1 million in Oregon to qualify. There is no per production cap. The 2009 Oregon legislature passed SB863 which created the Indigenous Oregon Production Investment Fund (i-OPIF). The i-OPIF program will provide rebates of 20 percent of goods and services and 10 percent of Oregon labor for films produced by LOCAL Oregon filmmakers who spend a minimum of $75,000, up to the first $1 million of their spend. Also, the state has no general sales and use tax and lodging taxes are waived for rooms held longer than 30 days."
$100,000 Production Incentives
- "The Colorado Film Incentive program offers a 20 percent cash rebate for production costs taking place in the state. The incentive program covers feature films, television pilots, television series (broadcast and cable), television commercials, music videos, industrials, documentaries, video game design and creation, and other forms of content creation. Bonded productions are eligible to have 100 percent of their projected rebate escrowed up front with the bond company. An additional component of the program is a loan guarantee program with the State guaranteeing up to 20 percent of a production budget. This program is only available to film productions. A production may be eligible for both the performance-based incentive and the loan guarantee programs. To be eligible, a Colorado production company must have qualified local expenditures of at least $100,000. An outof-state production company must have at least $1 million in qualified local expenditures (the exception being television commercials and video game productions, which must have qualified local expenditures of $250,000)."
- More like a minimum expenditure of $100,001 - "Production companies incurring production expenses or costs between $100,000 and $500,000 are eligible for a 10 percent credit, between $500,000 and $1 million are eligible for a 15 percent credit, and over $1 million continue to be eligible for a 30 percent credit. The state also offers a tax credit for infrastructure costs, and exemptions for property, sales and hotel taxes."
- "Florida offers a base transferrable tax credit of 20 percent to 30 percent. Additional bonus credits of 5 percent are available for certain types of productions. There are three incentive categories: (1) General Production Queue: qualifying productions include films, TV (TV series may be ineligible), documentaries, digital media projects, commercials and music videos. A minimum of $625,000 must be spent and the maximum incentive award is $8,000,000. (2) Commercial and Music Video Queue: A minimum of $100,000 per commercial or music video must be spent. A production company must spend at least $500,000 within on fiscal year to apply (projects can be bundled). The maximum incentive is $500,000 per fiscal year. (3) Independent Emerging Media Production Queue: Films, TV, documentaries and digital media projects are eligible. A minimum of $100,000 must be spent and a maximum of $625,000 can be spent to qualify. The maximum incentive awarded is $125,000. Also, Effective January 1, 2001, any qualified production company engaged in Florida in the production of motion pictures, made for television motion pictures, television series, commercial advertising, music videos or sound recordings may be eligible for a sales and use tax exemption on the purchase or lease of certain items used exclusively as an integral part of the production activities in Florida. The state does not levy a state income tax."
- "No retroactive qualifying expenditures. Start counting your qualifying dollars on the date of APPROVAL. 25% of direct production expenditures and qualified personnel expenditures. Claim an extra 3% for expenditures at a qualified facility or post production facility or 10% for expenditures at qualified post-production facility. Form (to be filled out by the facility) Caps: Incentive for ATL personnel capped at 30% of total incentive. Application fee equal to .2% of the funding request (minimum $200, max $5,000)"
- "Rebates have increased to up to 25% of qualified MN expenditures, above the line talent (non-resident) will be included as an eligible rebate cost (cap $100K per person), and a production that spends more than $1M in MN will automatically qualify at 25% and will be audited by an independent auditor paid for by MN Film and TV."
- Puerto Rico
- "Puerto Rico has a transferrable tax credit equivalent to 40 percent of budget items paid to Puerto Rico entity or resident. There is also a 20 percent tax credit on nonresident qualified spending. 100,000 minimum spend per project."
- Rhode Island
- "The Motion Picture Production Tax Credit provides a 25 percent transferrable tax credit for costs incurred directly attributable to activity within the state. It also includes salaries for people working on the ground in the state. To qualify, a minimum of $100,000 must be spent, and at least 51 percent of shooting must take place in Rhode Island. There is a $15 million annual cap on the program and a $5 million cap per project, which may be waived."
$???? Production Incentives - No Clear Minimum Spend
- "The Film Production Tax Credit Act, which offers producers a transferrable credit of 30 percent of all qualified expenditures, including post-production, and will not sunset until 2021 (it is renewable in 5 year increments after 2021). Other benefits include: 30% of the qualified Illinois Production Spending."
- New Jersey
- "New Jersey offers a tax credit in an amount equal to 20 percent of qualified production expenses, available to production companies meeting certain criteria, chiefly: (1) At least 60 percent of the total expenses of a project, exclusive of post-production costs, will be incurred for services performed and goods used or consumed in New Jersey. (2) Principal photography of a project commences within 150 days after the approval of the application for the credit. Certain tangible property used directly and primarily in the production of films and television programs is also exempt from New Jersey's 7 percent sales tax."
- New Mexico
- "No minimum amount, however, the production must shoot at least one day in New Mexico. New Mexico offers a 25 percent tax rebate on all direct production expenditures, including New Mexico crew, that are subject to taxation by the State of New Mexico. It applies to feature films, independent films, television, regional and national commercials, documentaries, video games and post-production. Non-resident actors and stunt performers will also qualify under a separate tax structure. An additional 5 percent credit is available for either (1) direct production expenditures for qualifying television series; or (2) payments to resident crew (wages and fringes only) for services during production in New Mexico if a production utilize a qualifying soundstage for a minimum of 10 or 15 days of principal photography. (Days required are determined by total New Mexico budget.) New Mexico also offers the Film Crew Advancement Program, which is an incentive for production companies to help create more job opportunities for New Mexican film and television crew professionals. A production company is reimbursed 50% of a participant’s wages for up to 1040 hours physically worked by the qualifying crew member in a specialized craft position. Also, as an incentive, the state will issue a certificate which is presented at the point of sale and no gross receipts tax is charged. This incentive cannot be used in conjunction with the 25 percent tax rebate. In 2011, the legislature placed a $50 million cap on film production credits and staggered payment schedules over two or three years."
- New York
- "The state offers a Film Production Credit a 30 percent fully-refundable tax credit on qualified expenses while filming in the state. If the production spends less than $3 million on all costs related to work done at a qualified production facility, then a minimum of 75 percent of the principal photography days shot on location must be in New York State. This threshold requirement applies to location days only. Principal shoot days at a facility must not be included in the calculation of the 75 percent A 30 percent to 35 percent post production tax credit is also available, regardless of filming location. Refundable tax credits available for qualified commercials with added incentives for companies increasing volume of work in New York are available and there are film production activities/expenses that are exempt from state and local sales and use taxes. Also a film investment tax credit of up to 5 percent on investments in construction and upgrades to qualified film production facilities plus employment incentive tax credits for two additional years."
- "Pennsylvania offers a 25% Tax Credit to films that spend at least 60% of their total production budget in the Commonwealth. Projects eligible for Film Tax Credits under the Program are: the production of a feature film, a television film, a television talk or game show series, a television commercial, a television pilot or each episode of a television series intended as a programming for a national audience. Applications may be filed no sooner than 90 days prior to the start date of principal photography in the Commonwealth. We will be reviewing and approving application packages within a 90 day period: July 1st through September 30th; October 1st through December 31st; January 1st through March 31st; and April 1st through June 30th. Film Tax Credit Guidelines 2014. Project Audit for projects in receipt of a Film Tax Credit $100,000 or greater, or Report on Agreed Upon Procedures for projects with a Film Tax Credit of less than $100,000."
- "A hotel tax exemption, sales and use tax exemption for direct production expenses and income tax for performers limited to the amount performers would pay in their home states."
*"Production incentives" are a catch-all term for the different benefits a state can provide to a production. They can consist of one or all of the following:
- Tax Credits
- Cash Rebates
- Sales Tax Exemptions
- Lodging Exemptions
- Fee Free Exemptions
- Miscellaneous Enhancements
- State Specific Benefits