THE INCENTIVES PROGRAM - TIP

On June 3, 2020, Governor Jared Polis signed House Bill 1408 modifying the Colorado performance-based incentive for film production program as follows:

• Allows for the executive director to authorize the approval or issuance of an incentive in an amount that exceeds the current statutory limit of 20 percent of qualifying local expenditures;
• Appropriates $2 million to the office of the governor from the Colorado office of film, television, and media operational account cash fund for FY23 (7/1 – 6/30); and,
• Creates a film incentive task force to study how to make the performance-based incentive for film production in Colorado more effective.

On May 12, 2022, Governor Larry Hogan signed House Bill 641, creating the Theatrical Production Tax Credit Act as follows:

• Establishes a refundable tax credit equal to 25 percent of qualified total direct production expenditures for certain theatrical production entities;
• Limits qualifying salary, wages or other compensation to each worker receiving $100,000 or less per week;
• Qualifies resident and nonresident above-the-line and below-the-line labor costs;
• Limits the amount of tax credits that may be issued in any one year to $5 million per fiscal year (7/1 – 6/30);
• Limits the amount of credits that may be issued to a single theatrical production to $2 million; and,
• Establishes a sunset date of June 30, 2027.

That this Act shall take effect July 1, 2022, and shall be applicable to all taxable years beginning after December 31, 2021, but before January 1, 2027.

On May 12, 2022, Governor Larry Hogan signed Senate Bill 536, amending the Maryland Film Production Activity Tax Credit program by expanding eligibility for the credit against the State income tax for certain film production activities to include digital animation projects.

This Act will take effect on July 1, 2022, and shall be applicable to all taxable years beginning after December 31, 2021.

House Bill 1982 is on Governor David Ige’s desk and if signed would amend the motion picture, digital media, and film production income tax credit as follows:

• Increases the tax credit that may be earned on qualified production costs as follows:
  • From 20 percent to 22 percent of qualified production costs incurred by a qualified production in any county of the state with a population of over 700,000;
  • From 25 percent to 27 percent of qualified production costs incurred by a qualified production in any county of the state with a population of 700,000 or less;
• Requires every person making a payment to a loan-out company and claiming a tax credit to deduct and withhold an amount equal to the highest rate of tax plus any applicable county surcharge for all payments made to the loan-out company for services performed in the state;
  • The amounts withheld under this section shall be deemed to be a general excise tax withholding for the benefit of the loan-out company performing the service;
• Increases the total tax credits that may be claimed by each production from $15 million to $17 million;
• Reduces the minimum amount of required qualified production expenditures from $200,000 to $100,000;
• Eliminates the requirement for productions to submit a verification review by a qualified certified public accountant when applying for the film production tax credit;
• Requires the state to issue the tax credit certificate to the taxpayer no later than seven months after receipt of the taxpayer’s statement;
• Requires each taxpayer claiming the motion picture, digital media, and film production income tax credit to submit a fee in an amount equal to 0.2 percent of the tax credit claimed by the qualified production; and,
• Extends the sunset date of the program thru December 31, 2032.

Senate Bill 321 proposes to amend the Pennsylvania Entertainment Production program as follows:

• Increase the annual funding cap from $70 million to $125 million per fiscal year (7/1 – 6/30);
• Allows for the department, at its discretion, to award in one fiscal year up to:
  • 30 percent of the dollar amount of film production tax credits available to be awarded in the next succeeding fiscal year;
  • 20 percent of the dollar amount of film production tax credits available to be awarded in the second successive fiscal year; and,
  • 10 percent of the dollar amount of film production tax credits available to be awarded in the third successive fiscal year.

If enacted, this act shall take effect immediately and apply to fiscal years beginning on or after July 1, 2022.