Lights, Camera, Action! Regional Film Tax Credits

Posted on Thu, Mar 21, 2019 ©2019 Drucker & Scaccetti

CLARE PORRECA - OFFICIAL - 2016By: Clare Porreca, CPA, MT

 

What brings more celebrities to the Philadelphia area than Ben Simmons?  That’s right – film tax credits! New Jersey and Pennsylvania are battling for their piece of the billion-dollar film industry. Here’s what each has to offer.

 

Both PA & NJ (along with most other states) have enacted film tax incentive programs to expand the film industry in their states.  The PA & NJ film tax credits are especially appealing to producers because of the convenient East Coast location.  A quick summary of PA’s & NJ’s programs is below:

 

PA: Film Production Tax Credit Program

  • A 25% tax credit is available to productions that spend at least 60% of their total budget in PA
  • An additional 5% tax credit is available for productions that meet the minimum state filming requirements at a Qualified Production Facility
  • The credit can offset PA state tax liabilities, or it can be sold, transferred, or assigned to another entity
  • The PA credit is capped at $65 million annually
  • In addition to movies, the credit applies to TV shows, TV talk or game shows, and TV commercials

 

NJ: Film & Digital Media Tax Credit Program

  • Program was just reinstated in 2018
  • A 30% tax credit is available to productions that spend at least 60% of their total production expenses in NJ, or if they incur more than $1 million in qualified production expenses
  • The credit is increased to 35% for filming in South Jersey
  • The credit can be used against the NJ Corporation Business Tax and the NJ Gross Income Tax
  • Like PA, the credit is transferable to other taxpayers
  • The NJ credit is capped at $75 million annually

 

Both PA & NJ have some of the highest corporate tax rates in the country (9-10%) so these credits really make the states more appealing to film producers.  Two recent films that took advantage of the PA film tax credit are Creed II which received approximately $16.7 million in tax credits and M. Night Shyamalan’s Glass, which received approximately $7 million in credits. 

 

Critics of the film incentive programs argue the economic development promised through these programs isn’t worth the cost of the credit.  While this may be the case in certain situations, producers continue to take advantage of these programs.  So, @HughE_Dillon, get your camera ready, there might be even more celebrities to photograph in the next few years! 

 

As always, please call on The Tax Warriors® at Drucker & Scaccetti with your specific questions related to film tax credits, or any other tax-related matter.

Topics: film tax credit, film incentive program, tax credit program, film

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