Film Incentives in 5 States That May Surprise You

Posted on: May 21, 2024

Photo Credit: Andrzej Lisowski Travel // Shutterstock

By Jessica Mathis

The film industry has been shifting over the last 30 years as labor costs and taxes continue to rise in Los Angeles. In response, 38 states in the U.S. offer generous incentive packages to entice filmmakers to their locale.

Here’s a list of five states with amazing incentives.

Illinois

Basic info: Illinois offers a transferable, non-refundable tax credit of 30% qualified Illinois production spending and 30% on Illinois salaries up to $500,000 per worker. Productions can earn an additional 15% on salaries for hiring workers for disadvantaged areas.
Expenditure rules: The credit can be carried forward for 5 years. Minimum spend requirements are $50,000 in Illinois production spend for a project less than 30 minutes, $100,000 in Illinois production spend for a project 30 minutes or more. Productions must submit a diversity plan and promise to work in good faith to hire women and people of color.
Payroll, freelance, employment rules: Non-resident workers who qualify are limited to 9, with further caps on actors. For qualified productions spending $25,000,000 or less, no more than 2 non-resident actors qualify. For qualified productions spending $25,000,000+, no more than 4 non-resident actors qualify. For a television series, qualifying non-resident wages are limited to the entire season. Workers may be employees or freelancers.
Notable films: The Blues Brothers, A Nightmare on Elm Street, Home Alone
Learn more about Illinois film incentives here.

Kentucky

Basic info: Qualified productions can earn up to 30% in fully refundable income tax credits. Productions that feature specific counties in Kentucky prominently or promote Kentucky cultural heritage can earn an additional 5%.
Minimum budgets to qualify are: $125,000 (Kentucky based company) or $250,000 (other companies) for feature-length film or a television program and $10,000 (Kentucky based) or $20,000 (others) for industrial film or documentary. These projects may be filmed in part or whole in the Commonwealth, but incentives apply to in-state spends.
Expenditure rules: Individual projects are capped at $10 million, while the state has a $75 million annual cap for all productions. Qualifying expenditures include set construction and operations, lease or rental of property as a set location, payroll for above and below the line, audio and visual equipment and services, and accommodations.
Qualifying expenditures must be incurred with Commonwealth businesses and used only for the motion picture or entertainment production filmed or produced in the Commonwealth. Non-qualifying expenses to consider include airfare, anything from outside the state, wrap parties, and fees related to publicity, legal, payroll or accounting, etc. Incentives are non-transferable, but are refundable and may be claimed against the company’s Kentucky corporate, limited liability or individual income tax. Unused credits may not be carried forward.
Payroll, freelance, employment rules: Above-the-line production crew not to exceed $1,000,000 in payroll expenditures per person.
Notable Films: Goldfinger (1964), Kingsman: The Secret Service, Rain Man.
Learn more about Kentucky film incentives here.

Louisiana

Basic info: Louisiana offers up to 40% non-transferable, partly refundable tax credit incentives on qualified in-state expenditures, including production costs and payroll expenses. There is a base 20% offer with a 10% increase if shooting a Louisiana screenplay, and another 5% you can earn for shooting in Louisiana locales outside of New Orleans metro.
Expenditure rules: The incentives require a $50,000 minimum in-state expenditure requirement for Louisiana screenplay productions or $300,000 for all other eligible productions. The maximum amount of credits is $150 million per fiscal year. The maximum amount of credits that can be claimed is $180 million per fiscal year. They do have a cap on how much they offer filmmakers per year, so it’s first come/first serve with Louisiana screenplay productions taking priority.
Payroll, freelance and employment rules: Hiring local allows an additional tax credit of 15% for Louisiana resident payroll. The additional 15% credit is only allowed on the first $3 million of a resident’s payroll. Any amount above that shall be eligible for the 30% credit only. It must be expended on a natural person (not a loan-out) in order to qualify for the additional 15%.
Notable Films: Forrest Gump, Captain Marvel, Django Unchained.
Learn more about Louisiana film incentives here.

New Mexico

Basic info: New Mexico offers fully refundable tax credit of up to 40% on eligible film and television productions. The base is 25% with the opportunity to earn 10% additional for filming in specific locations, and another 5% for qualifying television productions.
There is also a 5% uplift for using qualified production facilities, but it can’t be stacked with the TV uplift. They also offer a film partner program for production companies who commit to produce films or commercial audiovisual products in New Mexico with a 10-year contract to lease a qualified production facility.
Expenditure rules: The current cap is $120 million per fiscal year, but that is being raised by $10 million until it hits $160 million in fiscal year 2029. There is no minimum spend, but a script review is necessary for every production that applies. Qualified expenditures include wages and expenses like rental fees, using facilities and items purchased within the state.
If your credits total more than $5 million, an audit by a licensed New Mexico CPA will be required. End screen credits must credit that the production was filmed in New Mexico. To qualify for the TV uplift, series must be intended for commercial distribution, have an order for at least 6 episodes in a single season, and have a New Mexico budget of at least $50K per episode. Pilots must be intended for series production in New Mexico.
Payroll, freelance, employment rules: There is a $5 million cap per production for non-resident principal performing artists and no cap for resident artists. There is a 15% credit with a cap on 20 qualifying below-the-line positions. These numbers are different with New Mexico film partners like Netflix, NBCUniversal and 828 Productions.
Notable films: Independence Day, The Avengers, Indiana Jones and the Last Crusade.
Learn more about New Mexico film incentives here.

Massachusetts

Basic info: Massachusetts offers two types of incentives, and taxpayers can apply to and receive both. There is a 25% production cost credit and a 25% production payroll credit. Both may be used against Massachusetts personal income tax or corporate excise liabilities, but each credit has its own qualification requirements. Credits are transferable, partly refundable.
Expenditure rules: To qualify for the payroll credit, there is a minimum of least $50,000 in Massachusetts production expenses in a consecutive 12-month period. If payments to an individual are equal to or greater than $1 million, payments to that individual do not qualify. The production expense credit can be 25% of the taxpayer’s Massachusetts production expenses related to filming in the state. It does not include payroll already calculated for with the payroll credit. At least 75% of the filming days must take place in Massachusetts, and production expenses in Massachusetts must exceed 75% of the total production expenses. The credit may not be used to reduce a taxpayer’s corporate excise tax liability below $456. Unused credits may be carried over, refunded or transferred by the taxpayers for the next 5 tax years (subject to certain conditions).
Notable films: Beetlejuice Beetlejuice, Ghostbusters (2016), Black Panther: Wakanda Forever.
Learn more about Massachusetts film incentives here.

Each of these states have unique cultures, weather, landscapes and stipulations to consider, and these are just five of the states trying to grab their slice of the industry pie. This comparison should serve as a good start to understanding the options out there for your next production, and portends an exciting future where the filmmaking process becomes more evenly distributed.

Jessica Mathis (AKA Divinity Rose) is an award winning screenwriter/performer/producer from Louisville, Kentucky. She is the CEO of She Dreams Content Development and Production, which focuses on female forward projects in comedy, docustyle and genre entertainment.

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