About EPEP StoreEP BrandsSupportCommunityNews & Info
Blog Home

Budgeting for 2022: A Production Accountant's Guide

EP's Payroll Tax, Production Incentives, and Business Development experts explain how inflation, unemployment, worker’s comp, and other economic trends will impact your 2022 production budget.
December 15, 2021
2022 Budgeting

It’s unavoidable - production costs will increase in 2022. To help you prepare, EP’s team of payroll tax, production incentive, and business development experts explain why. Gain insight on how economic trends will impact your finances next year, learn about incentive program changes, and let our experts guide you as you work to build an accurate 2022 production budget.

Watch the Budgeting for 2022 - What Productions Need to Know webinar, on demand now.

First, let’s touch base on what tax changes you can expect to see next year.

State Tax and Workers Compensation Changes

Payroll tax expert Becky Harshberger explains that federal borrowing and depleted state trust funds will lead to higher unemployment tax rates for many states in 2022. Oregon and North Carolina won't adjust rates because both have healthy trust funds. However, most other states are likely to do one of two things. They’ll either raise state unemployment insurance tax rates, known as SUTA or SUI, or they’ll issue a special tax assessment.

Each state sets its own SUTA rate, announced publicly via a tax notice. A special tax assessment is a flat fee increase that lasts until the state builds its trust fund back up. To give you an idea of what that can look like - New York issued a $12.75 per-employee fee after the great recession that tapered off over three years.

According to business development expert, Steve Wegner, state workman's comp rates will also increase moderately next year.

As states continue to issue notices in the coming weeks, we'll have more details on what rates will be and how these increases will impact your 2022 payroll.

Federal Tax Changes

A handful of states with depleted trust funds defaulted on federal advance loans they used to pay unemployment claims during the pandemic. These states elected not to use COVID relief program funds issued by the American Rescue Plan Act (ARPA) to repay their loans. When states default on federal unemployment loans, federal unemployment tax (FUTA) rates go up.

Based on how states are faring right now, Harshberger confidently predicts that California, Colorado, Connecticut, Illinois, Minnesota, New Jersey, New York, Pennsylvania, and the Virgin Islands will increase federal unemployment tax in 2022. Rates will increase by $21 per employee in these states, meaning employers' costs will rise from $42 to $63. The Virgin Islands are still paying off borrowing from the great recession, so their federal unemployment will increase to $252 per employee.

Additionally, the federal social security wage base is rising from $142,800 to $147,000, and employer match will increase from $8,854.60 to $9,114.

Now, let’s discuss how general economic trends are affecting productions.

The Impact of Inflation

The annual US inflation rate hit 6.8% in November of 2021 - the highest we've seen since June 1982. As a result, food, gas, and lodging have all become more expensive, and material costs skyrocketed in large part due to serious supply chain issues. Unfortunately, we expect this rate to continue to climb, albeit slowly, as we head into the new year. 

With that in mind, make sure your 2022 production budget allows you to absorb higher costs across the board. You can achieve this by including a percentage-based inflation buffer for line items subject to heavy fluctuation - like food. For example, Wegner suggests budgeting $1.50 to $2.00 more per plate to account for added costs you’ll face to feed your cast and crew.

The Ongoing Cost of Covid

Over the last two years, most productions spent 10-15% of their budget on COVID safety protocols - and a handful spent as much as 25%. The California Film Commission (CFC) reports that most of the state’s productions spent about 5% of their total film budget on COVID safety.

Labor costs account for 40% of all COVID compliance expenses - including salaries for safety officers, testers, drivers, location assistants, and medical personnel. The other 60% goes towards goods and materials, including outside testing vendors, plexiglass, sanitizing materials, face masks or shields, and quarantine stipends. Harshberger notes that all stipends are taxable and must be reported on W2s, so be sure to keep that in mind.

Considering inflation and the fact that the pandemic is wildly unpredictable, we suggest playing it safe by earmarking 10-15% of your total production budget for COVID compliance expenses. In the panel discussion, Wegner notes that taking a few extra seconds to add a specific tag to COVID-related line items in your budgeting software can be a smart move. Then, you can use the tag to easily run detailed cost reports.

Now that we have covered what’s changing when it comes to expenses, let’s talk incentives.

2021 Incentive Program Updates

Here are a few key incentive program changes that happened in 2021.

  • Attractive Location Opportunities
    Production incentive expert, Joseph Chianese, encourages production teams to add North Carolina to their shortlist of potential 2022 filming locations. He says, “North Carolina reduced minimum spend requirements for tv and movie projects and increased their spend caps. [Their program] gives you residence and non-residence above and below the line, and they have close to $30 million in available funding.”

    Chianese also mentions Kentucky as an attractive option. The state has $75 million in funding available, has a $250,000 minimum spend threshold, and is offering a refundable 30-35% tax credit effective January 1, 2022. Nebraska also has a new 20% grant.

    Internationally, Bulgaria is offering a 25% incentive, and Cypress increased their incentive from 35% to 40%.
  • Three States Face Loan Out Changes
    Georgia is discussing how loan outs will be handled in 2022 and has indicated that ‘hold days’ will not qualify for the incentive. Additionally, indirect taxes are impacting actor loan outs in New Mexico and Hawaii. If you plan to film in any of these locations, contact EP for details on how these adjustments affect your budget.
  • California Tax Incentive Update
    California’s Basics 3.0 tax incentive program hasn’t undergone any major changes, but it did get some major funding. In July 2021, a legislative bill added $180 million to the program - $90 million for the 2021-2022 fiscal year and $90 million for the following year. This bill also allocated $150 million to be used for renovating existing and building new California stages. In total, California currently has $660 million in available funding. 

Production teams wanting to take advantage of this program need to be aware of the calendar. There are several application deadlines throughout the year, and each one is specific to a certain type of project (independent film, feature film, TV, etc.). If you miss an application window, you have to wait until the next one to be considered for funding. You can see a list of deadlines on the California Film Commission website.

Legislative sessions are starting soon, which may lead to more incentive program changes coming down the pike. Sign up for the EP incentives newsletter to stay up to date, and use the EP incentive website as your trusted resource for domestic and international program details.

Preparing for a Profitable 2022

2022 promises to bring higher federal and state unemployment tax rates, ongoing COVID safety protocol costs, and persistently rising inflation. With that in mind, production accounts should be prepared to spend 10-15% more on 2022 productions. 

Plan your budget accordingly, and keep an eye on the EP blog and incentives website for updates. We'll also be releasing our 2022 paymaster guide early next year, so stay tuned! In the meantime, contact EP if you have questions on rates, incentive programs, budget guidance, or payroll tax.

Related Content

Master Series: Budgeting for 2022-1

Budgeting for 2022: What Productions Need to Know

From unemployment taxes and worker's compensation to the price of labor and materials, production costs...

Film Financing Explained: Soft Money Financing

Vivian Hua joins our panel of financing and incentive experts to discuss funding film and television...
 John Hadity-Guide to Soft Money Financing-sq

The Beginner’s Guide to Soft Money Financing

How filmmakers can capitalize on incentives, film funds, and more to finance their next project

Meet the Production Accountant

From budgeting, to billing, to payroll, the financial powerhouse behind every production

35 Production Accounting Terms You Should Know

Ready to test your production accounting vocabulary knowledge? See how many of these 35 common terms you...

Film Commission Report Highlights Covid Costs as Production Ramps Up

Covid-compliance measures impact production budgets, estimating $90 million or more

Why Accurate Payroll Tax Withholding Matters to Film Budgets

Wendy Black, EP’s Vice President of Incentive Operations, shares tips for ensuring your production...
Best Practices for Year-End Payroll Cleanup-Panelists-sq

Best Practices for Year-End Payroll Cleanup

Payroll tax expert Becky Harshberger shares best practices to help production accounting teams prepare for...
john hadity-beginners guide to hybrid film financing

The Beginner's Guide to Hybrid Film Financing

How to successfully navigate working with foundations and investors to finance your next social-impact...
John Hadity-Sandra Schulberg-Hybrid Financing Master Series

Film Financing Explained: Hybrid Financing

Sandra Schulberg joins John Hadity for a spirited discussion on Hybrid Financing and how filmmakers can...
Master Series Thumbnail-Best practices for accurate payroll tax withholding

Best Practices for Accurate Incentive Payroll Tax Withholding

Learn how payroll tax withholding impacts a production incentive or film tax credit, and how productions...
Equity Financing Panel-thumbnail

Film Financing Explained: Equity Financing

James Schamus and Michael Helfant join our panel to share expert advice on funding film and television...

The Beginner’s Guide to Equity Financing

Expert advice to help producers secure funding for their next project

The Beginner's Guide to Production Incentives

EP helps filmmakers navigate the complex world of film and television incentives

Creating a Winter Wonderland

How ‘Elf’ Production Designer, Rusty Smith, Produces the Perfect Snowy Scenes for Film and Television

Meet the Editor

‘Chucky’ editors Randy Bricker and Shiran Amir on navigating the entertainment industry and how they...
EP BLOG_Payroll_Cleanup_Becky_Harshberger_sq

Everything You Need to Know About End-of-Year Production Payroll Cleanup

Reconciling payroll errors and generating accurate W-2s can be a tedious process. These proactive steps...

Kickstart Your Production Career with the EP Academy

From Production Accounting basics to technology certifications, EP’s online courses offer one-of-a-kind...

Mission: NOT Impossible

Production incentives give producers options, increase infrastructure development and jobs promoting...
Identity Security Film Production-sq

Identity Security in Production

5 Strategies to Manage Risk and Resist Cyberattacks in the Entertainment Industry
5 top payroll tax errors-Becky Harshberger

5 Top Payroll Tax Errors and How to Prevent Them

Production payroll can be a daunting task, but it doesn’t have to be! Payroll Tax expert Becky Harshberger...

How to solve a compounding problem?

The perennial shortage of production accountants has been made worse by the competition for resources, but...
Canadian flag

5 Things to Know Before Working in Canada

Prepare for your next job in Canada with this checklist of payroll considerations
Topic: Canada

New Terms Under Return-To-Work Agreement

RTW extension includes new two-part delineation, and the role of the vaccine
Topic: Legal
Los Angeles County Revised Health Order Eases Most COVID-19 Restrictions, Reinstates Masking Requirements

Los Angeles County Revised Health Order Eases Most COVID-19 Restrictions, Reinstates Masking Requirements

Of note, the June 2021 Order (1) required unvaccinated or partially vaccinated individuals to wear a mask...

5 Things to Know Before Relocating for Your Next Job

What production workers need to consider before moving to a new state
Cal/OSHA Updates Standards to Protect Workers from COVID-19

Cal/OSHA Updates Standards to Protect Workers from COVID-19

Effective June 17, 2021, Cal/OSHA revised its Emergency Temporary Standards (ETS), which now accounts for...
Anthony De La Rosa EP Residuals

The Beginner's Guide to Film and Television Residuals

Important details every producer should know as they budget for their next project

Diversifying Hollywood Through Better Hiring and Training

How new legislation and production incentives are promoting diversity and inclusion
Sarah Westman-liu and Jennifer Liscio

Canadian Incentives and Legislation News

The latest updates on incentives, CRA guidance on COVID-19 related costs, and more!
actors on set

Safety on Set Amid Changing COVID-19 Guidelines

What productions should know as they head back to work

Choosing the Right Production Incentives

5 questions to ask when selecting your next incentive-based filming location

Meet The Costume Designer

From sketching to fittings to final looks, Shawna Trpcic ('The Mandalorian') and Michael Wilkinson...

Innovations in Production Incentives

How emerging local initiatives are driving productions to new jurisdictions

The Beginner's Guide to Production Financing

What to know before starting your next film or television project
Producing through COVID women producers panel

Producing Through COVID-19: A Discussion with Six Prominent Women Producers

Stories of navigating the entertainment industry and producing during a pandemic

SB 973, California Pay Data Reporting Law FAQs

The new pay data reporting law and its impact on the entertainment industry

PayTalk: The Recipe for a Successful Payroll 2022 (Part One)

Davida Lara joins the PayTalk podcast to share strategies for leading successful teams

The Future of Film and Television Production

Virtual stages, remote production offices, and other advances in technology drive the evolution of...
New York City Imposes Mandatory Vaccination Requirement On Private Employers

New York City Imposes Mandatory Vaccination Requirement On Private Employers

Starting December 27, 2021, workers in New York City must provide proof of vaccination against COVID-19 to...
Los Angeles Times logo-sq

California productions to spend at least $90 million on COVID-19 safety measures

A new report has put a price tag COVID-19-related costs, according to data released from the California...

Film Festivals: Online or In-Person?

Producers weigh in on the state of festival season post-pandemic, featuring Divi Crockett and Mike Drake

The Psychology of Terror

How our deepest personal fears inspire cinematic monster makers Todd Masters and Steve Wang
Christine Davila, Jairo Alvarado, Sonia Gambaro

Authentic Latinx Storytelling Starts with Inclusion

Christine Dávila, Jairo Alvarado, and Sonia Gambaro work to amplify the talents of underrepresented...

Streamers and the Changing Landscape of Film Distribution

Director/Producer Daniel Farrands on strategies for success in the time of VOD

Meet the Paymasters

The hard-working payroll professionals behind Hollywood's paychecks

‘No Straight Lines’ & ‘Firstness’ Among Top Winners At Outfest Los Angeles LGBTQ Film Festival – Complete Winners List

Outfest has announced the award winners of its 2021 Outfest Los Angeles LGBTQ Film Festival.
New Terms Reached Under Return-To-Work Agreement: Delineation into Two Parts, and the Role of the Vaccine

New Terms Reached Under Return-To-Work Agreement: Delineation into Two Parts, and the Role of the Vaccine

In September 2020, the AMPTP and the industry’s Unions issued a Return-to-Work Agreement setting forth...
 Adjusting the W4-Becky Harshberger-Sq

How to Adjust Your Tax Withholdings Using the New W-4

Making small adjustments throughout the year can save production workers big at tax time!

Designing for Horror

Daniel Farrands and Andrew Murdock share insights on how filmmakers create fear through visual techniques
Rate-In-Effect Permitted As Alternative to Weighted Average For Overtime with Multi-Pay Rates

Rate-In-Effect Permitted As Alternative to Weighted Average For Overtime with Multi-Pay Rates

The California appellate court in Levanoff v. Dragas upheld the employer’s use of rate-in-effect, citing...
Federal OSHA’s New Guidance on Mitigating and Preventing the Spread of COVID-19 in the Workplace

Federal OSHA’s New Guidance on Mitigating and Preventing the Spread of COVID-19 in the Workplace

The guidance contains recommendations for maintaining a safe workplace, with a particular emphasis on...
EEOC Approves Employers Mandating Employee COVID-19 Vaccination, with Exceptions

EEOC Approves Employers Mandating Employee COVID-19 Vaccination, with Exceptions

EEOC declares employers do not violate disability rights or other equal employment opportunity laws by...
California Supreme Court Surprises Employers on Penalty Rate Used for Meal and Rest Break Violations

California Supreme Court Surprises Employers on Penalty Rate Used for Meal and Rest Break Violations

In mid-July, the California Supreme Court issued a long-awaited decision concerning the correct payrate...
Paul Beyers prop master on set

Meet the Prop Master

From script to screen, the creative mind behind the props from film and television; featuring Prop Masters...
Celebrating Pride Month Panel

Celebrating Pride Month and LGBTQ+ Film and Television

Celebrate Pride month with us as our panel of groundbreaking producers and activists discuss the past,...

Entertainment Partners Launches New Production Incentive Tools

New Online Tools help Filmmakers and Producers to Identify their Best Global Tax Incentives

Meet the Producer

From concept to the red carpet, the producer is there to keep the production moving forward

Getting a New Start

Davida Lara shares tips on transitioning into your next role

The Path to Better Diversity and Inclusion in Hollywood

How production incentives are helping to promote inclusivity

The Beginner's Guide to Federal Payroll Tax Withholding

Essential information for individual production workers
Spotlight on Georgia Production Panel

Spotlight on Georgia: The Producers' Perspective

A dynamic group of producers, industry experts, and incentive specialists discuss the state of production...

Spotlight: Joseph Chianese, Film Production Incentives Expert

Meet the SVP and Practice Leader of Production Incentives at EP

COVID-19 and the Impact on State Unemployment Insurance

How high unemployment claims have led to increased SUI rates across the US
California Revives COVID-19 Supplemental Paid Sick Leave for California Workers

California Revives COVID-19 Supplemental Paid Sick Leave for California Workers

On March 19, 2021, Governor Newsom of California signed into law Senate Bill 95 which revives the...

Winning Payroll Solutions Start with the Right Team

Davida Lara on why the people who make up a payroll team are critical to delivering results

Entertainment Partners Introduces Wage Data Reporting Solution

EP offers new service to help employers prepare their SB 973 reporting
The DFEH Offers Further Guidance on SB 973 Reporting

The DFEH Offers Further Guidance on SB 973 Reporting

In February 2021, the Department of Fair Employment and Housing (DFEH) issued more detailed guidance for...
Pantea Ahmadi and Joe Scudiero

SB 973's Impact on the Entertainment Industry

How California’s new pay data reporting legislation, SB 973, applys to the entertainment industry
Topic: Legal
Rounding Prohibited for California Non-Union Meal Breaks and Penalties

Rounding Prohibited for California Non-Union Meal Breaks and Penalties

On February 25, 2021, the California Supreme Court ruled in Donohue v. AMN Services, LLC that rounding is...

Diversity and Pay Reporting in California

Your guide to understanding SB 973 and its application to the entertainment industry

Returning to Production: Hair and Makeup Teams Apply COVID-19 Protocols to Life on Set

Getting back to work: a look inside set life during COVID-19

Payroll Tax Changes and the New Form 1099NEC

What you need to know before filing for the 2020 tax season

Profiles in Leadership: Martin Mazor, SVP and CISO, Entertainment Partners

Why Identity is at the Core of Every New Security and Business Initiative

Digital Production Studio

Production Finance StudioProduction Management StudioEnterprise Management Hub

EP Sites

Central CastingEntertainment PartnersEP StoreSyncOnSetThe Production CommunityWe Got POP
Subscribe now

Be an industry insider with EP's
newsletters and alerts

LegalPrivacy NoticeSecurity
© 2022 Entertainment Partners. All rights reserved.