Tax Day, one of the most dreaded days of the year, typically falls in the third week of April. With less than two months until taxes are due, now’s the time to find out if you qualify for any tax breaks. If you work in film industry, particularly for production companies or film studios in NYC, we have some good news: you might qualify for a tax credit. Although the laws on who is eligible for a film tax credit vary per state, a tax credit itself is defined as “a dollar-for-dollar reduction of your income tax liability.” Tax credits act as incentives paid by states for production companies to film in-state. A tax credit is different than a tax deduction, but it is still just as valuable because it could mean that you are required to pay only a fraction of your taxes, or sometimes none at all. Of the 28 states that offer tax credits, New York is one of them. To get a better idea of how film tax credit works, let’s review the Third Quarter Film Tax Credit Report for 2017 published by Empire State Development (ESD.)
Film studios and production companies located in the state of New York are allowed to apply to the Empire State Development to request a tax credit, as they are responsible for granting film production and post-production tax credits. There is a list of eligibility requirements to receive a tax credit, but applications are accepted on a rolling basis. The maximum tax credit that any film studios NYC or production companies in the state can be awarded is 30% of qualified production and post-production costs gathered in the state of New York. There are conditions to production and film companies receiving their tax credits, which are dependent upon the total cost of the project. The third quarter report details that 66 applications were submitted for production tax credits, as well as 21 post-production tax credit applications. Only 38 applications for production tax credits and 10 applications for post-production tax credits were accepted; film projects received $155.2 million in tax credits and post-production projects were awarded $5 million.
While it may seem that film studios in NYC and production companies in New York were awarded quite a bit of money in tax credits, remember that their projects are very high budget. Additionally, the ESD did not accept every application that they received- most likely due to incomplete or inaccurate eligibility requirements. Tax credits can be extremely beneficial for production companies and film studios because they are able to get some of the money that they invested in the film or TV series back. If you work in the film industry before you gather your paperwork to file your taxes, be sure to check the eligibility requirements to apply for a tax credit.