State Tax Credits For Film Production Companies: Show Me The Money!

State Tax Credits For Film Production Companies: Show Me The Money!

By Christopher Matteodo | Many states have become caught up in trying to lure Hollywood into using their state as the filming location for the next big-budget blockbuster. In the current challenging economic climate, the local production of large movies, television shows, and video games can help to stimulate the local economy by creating jobs, building infrastructure, and generating revenue for local businesses.Companies or organizations considering getting involved with a production opportunity may be able to leverage the related tax credit and, ultimately, reduce or eliminate their own potential tax liability.

Tax film credits are one of the many incentives that states are willing to offer to film production companies in order to attract their business; in fact, twenty-eight states now offer film tax incentives to qualified film production companies. Twenty-six of these states allow for film production companies to transfer any film tax credits they have received to a third party. Additionally, many of these states allow unused tax credits to be carried forward into future tax years.

While credits and other incentives vary from state to state in amount and type, Rhode Island has proven extremely successful in navigating and facilitating this process. Rhode Island provides a transferable 25% tax credit against the corporate or personal income tax for all certified costs of any film production company while filming on location in the state. However, Rhode Island is only willing to extend these incentives so far. In Rhode Island, only expenses incurred from local vendors who (1) are subject to Rhode Island taxation, and (2) are qualified to do business in Rhode Island, will qualify as certified costs eligible for the incentive. Further, Rhode Island excludes a number of types of productions from qualifying for film tax credits including: live athletic events; prerecorded news programs; local talk shows; and infomercials.

If Hollywood comes knocking with the next big-budget blockbuster, businesses considering getting involved with production opportunities  are well-advised to look for guidance from their attorneys and accountants to ensure they receive the maximum advantage from  state film tax credits and other state and federal sponsored incentives.

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