THE INCENTIVES PROGRAM - TIP

On June 27, 2024, Governor Gavin Newsom signed Senate Bill 167 into law, thereby amending the Sales and Use Tax Law by imposing a $5 million per taxable year cap of the income tax credit amount a qualified motion picture can apply against qualified sales and use taxes for taxable years beginning on or after January 1, 2024, and before January 1, 2027.

This act takes effect immediately.

On July 10, 2024, Governor Phil Murphy signed Senate Bill 3275 into law, thereby amending the New Jersey film and digital media content tax credit program, as follows:

• Establishes a tax credit equal to 35% of qualified digital media content production expenses incurred for postproduction services including visual effects services performed by a qualified independent postproduction company, provided that:
  • At least $500,000 of the qualified digital media content production expenses of the taxpayer are incurred for postproduction services including visual effects services performed by a qualified independent postproduction company, as defined;
• Establishes a tax credit equal to 40% of qualified digital media content production expenses incurred for postproduction services including visual effects services performed at a New Jersey film-lease production facility or that are incurred by a New Jersey studio partner, provided that:
  • At least $500,000 of the qualified digital media content production expenses of the taxpayer are incurred for postproduction services including visual effects services performed at a New Jersey film-lease production facility or are incurred by a New Jersey studio partner;
• Modifies the Diversity Plan bonus by allowing for:
  • An additional credit equal to 2% of the qualified film production expenses (with the opportunity to be increased to 4%) or an additional credit of 4% of the digital media production expenses, provided the diversity plan accompanies the application and outlines specific goals, has been approved by the director and authority, and has been verified by the director and authority that the applicant has made good faith efforts in achieving those goals;
    • The diversity plan bonus for film production expenses may be increased to 4% if the diversity plan also outlines specific goals that include hiring persons as performers in the film who are:
      • Women or members of a minority group;
      • Residents of NJ for at least 12 months preceding the beginning of filming; and,
      • Members of a bona fide labor union representing film and television;

• Increases the amount of qualified compensation for a highly compensated individual for taxpayers other than New Jersey studio partners and New Jersey film-lease production companies from the 1^st $500,000 to the 1^st $750,000;
• Modifies the definition of a loan out company by requiring a personal service corporation or other entity to be authorized to do business in New Jersey;
• Stipulates that wages of individuals that are not subject to tax due to the provisions of a reciprocity agreement with another state may now qualify;
• Stipulates that for reality shows:
  • At least 60% of the total film production expenses, exclusive of postproduction costs, be incurred in New Jersey;
  • Incur more than $1 million in qualified production expenditures during the privilege period for services performed, and goods purchased, through vendors authorized to do business in NJ; and,
  • Must have obtained a minimum order of six episodes from a major linear network or streaming service.

This act shall take effect immediately.