Change may be coming to New York State’s Film Production Tax Credit Program (the “Film Tax Credit Program”).
As part of the Governor’s proposed 2024 Executive Budget, New York State Governor Kathy Hochul has proposed big changes to the State’s Film Tax Credit Program. These proposed changes come during a time when the Empire State is facing stiff competition for film and television projects – at least partially a result of the tax credit battles being waged between certain States – California, Georgia, New Jersey, and New York, to name just a few.
In an effort to keep New York State competitive as a film and television hub, Governor Hochul has proposed certain changes to the Film Tax Credit Program, some of which are listed below:
- Increasing the annual cap to $700 million in tax credits, an increase over the current per-year limit of $420 million.
- Extending the Film Tax Credit Program for an additional five (5) years – from 2029 through 2034.
- Boosting the percentage for qualified expenses to 30%, an increase over its current level of 25%. There will also be an additional 10% credit available for productions that choose to film in certain locations throughout New York State (with Erie County being one of those designated).
- Including a limited credit for certain “above-the-line” costs (e.g., salaries for principals – actors, directors, writers, composers, etc.).
- Adding a “relocation” credit, whereby productions can receive an additional 5% credit for having television series relocate to New York State from a different jurisdiction.
The Film Tax Credit Program serves to incentivize film and televisions projects to choose New York State as their base for production and post-production activities and often plays a critical role in a production company’s overall financing strategy.
These types of tax credit programs have generated both employment and additional tax revenue for municipalities and counties throughout New York State given the attendant location-specific expenses incurred by the visiting production companies (e.g., hotels, restaurants, local vendors). Western New York has been a notable beneficiary of the Film Tax Credit Program, as evidenced by the increasing number of feature length projects that have chosen Buffalo as a primary filming location, as well as the construction of multiple film and television production studios in the area to accommodate the increasing number of such projects.
With that said, there is a contrary perspective which generally contends that the jobs and tax revenue generated, while undoubtedly positive byproducts, do not ultimately outweigh the overall cost of the Film Tax Credit Program.
The changes proposed by the Governor will be voted on this Spring when the New York Legislature convenes to finalize the State’s budget.
If you have questions about how the changes to the Film Tax Credit Program could impact your business, contact our business law team.
