While the credit probably caused some film and television projects to be made here, many other similar projects also were made here without receiving any financial incentive. Some conclusions from state fiscal office evaluations are below:Ĭalifornia Legislative Analyst’s Office: “In our evaluation of the first film tax credit, we found that the costs exceeded the benefits. Policy analysts from both left- and right-leaning think tanks have also questioned whether these programs are the best use of a state’s money. The states that have performed evaluations of their film tax incentive programs have commonly found that, despite the positive anecdotal evidence that accompanies big film projects, such programs do not provide a substantial return on investment and, if economic development is the goal, other policy avenues might be more productive. This trend continued well into the recovery, in conjunction with a rise in state efforts to improve their evaluation and oversight of tax incentive programs. After the Great Recession, many states began paring back these incentives to save money. Virgin Islands offer tax incentives for film production, but at the peak in 2010, 45 states, Washington D.C., and Puerto Rico offered them. Today, at least 35 states, DC, Puerto Rico, and the U.S. Louisiana was the first state to adopt a tax incentive program for film and television production in 1992 and the strategy took off nationwide through the early 2000’s strong. Legislators cited concerns of losing film industry business over changes to the current incentive programs.

In Georgia, a bill to limit tax film credits at $900 million annually was introduced to the legislature but failed to pass earlier this year. Legislation approved in New Jersey increased the annual limitation on digital media content production tax credits to $30 million from $10 million and increased the percentage of qualified expenses that can be claimed. After a failed attempt to revive film incentives in 2017, West Virginia reinstated an incentive program with no cap on the amount of credits that can be awarded annually. The state of Washington increased the amount of film tax credits that could be awarded annually from $3.5 million to $15 million. Illinois expanded its existing credit program by increasing the cap on qualified resident and non-resident wages to $500,000, up from $100,000 for resident wages only. In 2022, at least five have done so: Indiana created the state’s first film tax credit program. In 2021, with the economy well on the rebound, at least 10 states enacted measures to implement or expand film tax incentives.

The credits are often refundable or transferable if the value of a company's credits is higher than its tax liability, it can sell the excess credits to another taxpayer who owes the state taxes. Film tax incentives typically come in the form of tax credits equal to a percentage of a film or television production’s qualified in-state spending and/or exemptions from sales tax on qualified transactions. States have long offered tax incentives to entice new film or television production activity, but support for these programs has spiked in the wake of the recovery from the COVID recession, which sent the film industry reeling as theaters closed and productions were postponed. The big screen can cast a city or state in a whole new light, attract tourism and create jobs. Hollywood! Celebrities! Glamour! For states looking to spur economic development, the prospect of growing a larger film industry presence is highly appealing. Fame, fortune and the movies are intertwined.

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