The Beginner's Guide to Production Incentives

Whether you’re a rookie just starting out or veteran in the film industry, navigating the world of production incentives can be daunting, especially so in the era of COVID-19. These practical tips will help clarify this important part of pre-production, so you can begin finding the right funding options for your next project.

Production Incentives: The Basics

Production incentives fall into three different categories and all have the standard requirements that you must pre-qualify, spend money locally, and then go through an audit process after production has wrapped:

1. Rebates and Grants: These production incentives are the simplest because they don’t require you to file a tax return to receive the money. This is usually the fastest option, and you should receive your money back about 60-90 days after principal photography wraps.
2. Refundable Tax Credits: The timeline to receive your funding back on this incentive takes the longest out of all the incentives because you have to wait for the money to come back after taxes are filed. EP does offer an option to shorten that timeline by helping to finance those incentives and the minimum guarantee up front by offering 85-95% of the anticipated credit. We will also help with handling the administration of the process and recommending companies who can provide auditing services.
3. Transferable Tax Credits: For this type of incentive, spending your money locally in a filming jurisdiction earns you credits, which you can then sell to a buyer. While this may help your bottom line, be aware, most credits do not sell dollar for dollar and there are a few filming jurisdictions where they are non-transferable and non-refundable (i.e., California). In addition, this incentive is unique to domestic productions. You’re not able to sell credits outside the US. When searching for a buyer, EP can act as your agent for buying and selling credits.

How is COVID-19 impacting film and television budgets, tax incentives, and locations?

COVID-19 brings up additional production costs that you’ll need to factor into your budget. Some producers are even adding another 25% to their budget to cover Covid-related costs. To stay current on COVID-19 protocols domestically and internationally, and other expert insights related to COVID-19, visit our News & Info page.

In the current COVID-climate, producers are opting for filming locations that are safest in less densely populated areas with infrastructure and crew available. There is an explosion of newly qualified filming facilities (such as Broadway stages turning into film sets) and new sound stages being built in locations like Wyoming, Utah, and Toronto that allow for controlled environments to monitor the health of cast and crew - which are now some of the safest places to work because of the protocols and procedures enforced.

Are there options beyond production incentives for funding?

Absolutely. Never limit yourself to jurisdictions with publicized incentives. When scouting locations, reach out to local film commissions or the Department of Economic Development and pitch to them your project, especially if it has a big movie/actor/ director attached to it that would bring publicity to that location. Productions can help foster tourism, so there are pools of funding that could be accessible because you’re helping to boost the local economy.

What are some questions to consider when scouting filming locations for tax incentives?

1. Do they have money and how do I get it? Some jurisdictions have funding that is not capped, such as Georgia and Canada. However, others, such as New York, Louisiana, and California do have capped incentive programs, so you have to know how much money is available before you choose to apply.
2. Is anything going to change in legislation related to filming incentives? Once you’ve submitted into a program, you’re grandfathered into the old law. Be sure to stay informed about any pending changes to legislation that could impact your access to filming incentives. That’s where EP can be a huge asset in preparing you for what’s ahead to ensure you’re consistent in the process, law, and funding.
3. Is it more cost-effective to stay local instead of filming in a new location? Create multiple budget scenarios and do a comparison. There’s more than just production incentives that should inform your location decision. Cast, crew, lodging, and travel costs can all increase your budget so it may actually end up being more cost-effect to stay locally instead of leaving for another state.

For more information about production Incentives, visit Production Incentives or contact our expert team.