As the pandemic exited its first lockdowns and film production tentatively recommenced amid overall economic uncertainty, the fate of U.S. tax incentives for feature film and television appeared cloudy. Wrote James Cutchin in the Los Angeles Business Journal on August 20, 2020, “State coffers have been drained after months of lockdowns, starved of key tax revenues and exhausted by the costs of fighting the virus. With states facing such bleak financial outlooks, some wonder whether governments will continue to fund film tax credit programs.”

Two and a half years later, those worries have been largely banished. Last fall in an Entertainment Partners online seminar, Jay Roewe, SVP, Global Incentives, HBO/HBO MAX/Warner Bros. Discovery, said tax incentives have “surged” not just in the U.S. but all over the world. Since the pandemic, “15 to 20 states have improved and grown their incentives,” he said. “It’s an incredibly thriving time, and the challenge [for producers] is to keep track of all of this.”

The reason, Roewe and the panel went on to say, is not simply because of the economic multiplier effect, in which states claim that tax incentives generate a greater amount of economic activity and tax revenue, but also the speed with which they can do so. “Our industry is a vibrant industry that can come in quickly and stimulate the economy,” said Roewe.

For independent producers working with less than studio-sized budgets, the challenge is not only to keep track of which states are offering incentives or boosting existing ones, as Roewe noted, but also which have rules favorable to lower-budgeted films and crew bases not depleted by the latest round of Marvel shoots. As Filmmaker does each spring, here we take note of some of the recent changes in the U.S. tax incentive landscape.

Of the 50 states, 34 currently offer some form of film and television tax credit, with at least one—Delaware—about to go online. (Delaware’s pilot program, focused on “digital entertainment,” launches for the fiscal year July 1, 2023 to June 30, 2024 and offers a 30 percent refundable credit; however, the program has a beginning funding cap of just $1 million.) With so many states offering credits, incentive wars are brewing among states, and productions are traveling from one to the other to take advantage. For example, California is used to losing productions due to how many quickly deplete its $420 million spend. Governor Gavin Newsom signed legislation last year boosting incentives specifically aimed at “relocating series” from other states to just over $70 million annually through 2024. Issa Rae’s HBO series Rap Sh!t is among the 27 productions that have relocated to California. 

New York boasts a large number of stages and competes with Los Angeles and Georgia for Hollywood productions. In February 2023, as part of the budget for the fiscal year beginning April 1, Governor Kathy Hochul proposed raising the state’s annual incentive funding allocation from $420 million to $700 million. This would make New York’s allocation the second highest in the nation, after Georgia’s. She has also proposed raising the credit back to 30 percent from 25 percent, to which it was lowered in 2020. Other proposed changes include making above-the-line costs up to $150,000 per individual eligible, extending the credit until 2034 and speeding up payment of the credit. (See sidebar.) Productions taking place in Buffalo and western regions, where Guillermo del Toro’s Nightmare Alley was shot, are eligible for an additional 10 percent.

Since expanding the scope of its transferable Film & Digital Media credit in 2021, New Jersey has become competitive for both studio and independent films, although the state’s overall annual cap is just $100 million. Credits range from 30 to 35 percent of eligible expenses and an additional two to four percent in diversity bonuses. Signaling the state’s long-term ambitions, last fall the New Jersey Economic Development Authority began the process of accepting applications for a separate $100 million to support the building of stages and other long-term facilities.

Further down the east coast, Georgia continues to be noted for its overall largesse toward the film and television industry. Unlike many other states, there’s no budget cap restricting the payout of its 20 to 30 percent credits. That means that last fiscal year ending June 30, the state—home to Marvel shoots like Black Panther: Wakanda Forever, Netflix’s Stranger Things and AMC’s Walking Dead—issued a gigantic $1.3 billion in credits, more than three times the sums issued by New York and California. The eye-popping amount has drawn political criticism, but in 2022 a Georgia Senate Finance Committee proposal to instill a $900 million cap was defeated. 

Different states require different minimum spends to receive a credit. North Carolina, for example, requires that features spend $3 million in the state to quality for its 25 percent crew credit. In Oregon, the minimum spend is $1 million. In New York City’s five boroughs and neighboring counties, films must have a minimum budget of $1 million to qualify for the credit. (Outside these areas, the minimum is $250,000.) With lower minimums—$250,000 for features and only $20,000 for documentaries—Kentucky is one of the more attractive states for independents. Recent Kentucky productions include two Sundance titles, Laurel Parmet’s fiction feature The Starling Girl and Elaine McMillion Sheldon’s doc King Coal.

Montana is another state with a relatively low minimum spend of $350,000. The state’s transferable nonrefundable credit is 25 percent for local residents and 15 percent for nonresidents, with an additional five percent granted for the inclusion of “Film Montana” in the credits. But like many states, Montana’s credit excludes docs. 

Production has boomed in Oklahoma since 2021, when the state’s Filmed in Oklahoma Act hiked up incentives to 38 percent. Larger pictures, such as Martin Scorsese’s Killers of the Flower Moon, have landed in the state, but particularly noteworthy is a new incentive offered by the Cherokee Nation, an additional credit up to 25 percent on top of the state incentive for filming on Cherokee land, which encompasses 7,000 square miles and includes a virtual soundstage, the Cherokee Studios. $1 million per year is allocated toward the incentive and, reported the Los Angeles Times, “The film or TV show doesn’t have to be Native American–[served], but Cherokee Nation will consider the projects by merit rather than on a first come, first serve basis, with attention paid to projects that might help dispel stereotypes about Indigenous people.”

While film tax incentives, particularly in their earlier years, were criticized by elements of both the right and the left as being anti-free market or corporate giveaways, respectively, the dialogue around incentives is changing, allowing for legislative action that is seeing credit caps raised in states throughout the country. Film and television tax incentives are increasingly being defined as infrastructure or job development bills. But if the concept of these incentives is becoming less politically controversial, politics are entering into these discussions in other ways. Some of the states seeking to attract out-of-town productions also have restrictive abortion laws, such as the six-week ban in Georgia and Oklahoma’s near-total ban, the most restrictive in the country. Reproductive rights are now a workplace equity issue, and states are responding in their messaging. Just shy of six weeks after the Supreme Court’s overturning of Roe v. Wade, Newsom issued a social media statement calling for studios to move productions out of states restricting reproductive rights. “You can protect your workers or continue to support anti-abortion states that rule with hatred,” he said. “We’re here for you. We’re extending tax credits for those that come home to the Golden State.”