New York Gov. Aims to Boost Film Tax Credits to $700M As New Jersey Rivalry Heats Up
As seen on Hollywood Reporter.
New York is looking to increase the cap on tax credits the state gives to the film and TV industry from $420 million to $700 million and raise the incentive to 30 percent, according to the 2023 state budget proposed by Gov. Kathy Hochul on Wednesday.
The changes, which would run through 2034, are aimed at luring productions back from jurisdictions that left the state when it lowered its credit to 25 percent in 2020. Since then, states have turned to offering increasingly competitive incentives as film and TV production spending reached record highs. The proposal includes a 5 percent bump for TV series that relocate to New York, among other major revisions.
If the budget passes the legislature, it would also make above-the-line wage costs eligible for tax breaks for the first time, with certain restrictions. The credit would be capped at $500,000 per individual and limit above-the-line tax incentives to 40 percent of other qualified production expenses.
The proposed change follows Illinois Gov. J. B. Pritzker in April signing into law a measure that similarly allowed some non-resident wages to qualify. California is now the only state that doesn’t do so.
“Governor Hochul is focused on growing industries and opportunities across the state and the film and television industry is no different,” says Kristin Devoe, a spokesperson for Empire State Development, in a statement. “The proposed enhancement of the film tax credit will grow the film industry and keep New York competitive in this very important sector of our economy which has generated over $20 billion in spending and created 57,300 direct and indirect jobs.”
Additionally, the changes modify payout rules. A production would be able to claim the non-transferable, refundable tax credit the same year it’s allocated the incentive instead of having to wait a year.
A common complaint from prospective productions have been delays in payment, according to Devoe.
“A lot of people were avoiding New York, especially independent producers, because of that long payout,” says Joe Chianese, senior vp and practice leader at Entertainment Partners, a Los Angeles-based group that advises companies and state film offices on how to set up and structure tax incentive programs.
To be eligible for the 5 percent bump, relocating TV series must have filmed at least six episodes in other jurisdictions and have a minimum budget of $1 million per episode. California in 2022 passed a similar measure by reserving an additional $15 million for series that relocate to the state, bringing the total annual funding for such shows to $71.1 million. Criteria to qualify was relaxed to include projects that filmed their pilot episode out of state. (The program previously required relocating series to film an entire season outside of California.) Killing It and Rap Sh!t — two series selected to receive tax credits — moved production from Louisiana and Florida, respectively.
Under the proposal, tax credits to shoot in New York can reach as high as 40 percent if a production qualifies for a 10 percent bump by shooting in certain areas. Productions have increasingly been flocking to Buffalo and Western New York to qualify, Chianese says. Buffalo FilmWorks is currently constructing a $50 million facility set to become the largest soundstage in the state.
Several states, including New Jersey, Oklahoma and California, increased their film incentives when New York lowered its credit to 25 percent. As a result, productions fled the state. Soundstages that normally operate at full capacity have increasingly had vacancies, and at least 10 productions chose to film in New Jersey or other jurisdictions, Devoe says.
New York’s loss was New Jersey’s gain. In 2022, film and TV production spending reached a record $650 million. Gov. Phil Murphy reinstated the Film and Digital Media Tax Credit program in 2018 after a three-year hiatus.
The New York State Assembly is expected to vote on the budget proposal by April.