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'Yellowstone’ Pushes Texas to Up the Ante to Court Film and TV Projects

New Mexico, Louisiana and Oklahoma in 2022 saw more than $1.5 billion from film and TV productions. Texas could've seen some of that money if not for its middling production incentive program.
March 27, 2023

As seen on Hollywood Reporter

For studios, the best part about shooting in New Mexico might be how it looks so much like Texas.

That’s why Taylor Sheridan’s Hell or Hell High Water chose to shoot in New Mexico, as did Walker: Independence, King Rex and other projects looking for generous helpings of tax incentives to film in the state on top of desert valleys and wooded mountains mimicking Texas.

Texas is flanked by states known for offering robust tax credits to lure film and TV productions. The entertainment industry in 2022 pumped more than $1.5 billion into the economies of New Mexico, Louisiana and Oklahoma, much of it for titles set in Texas but unable to shoot in the state due to its middling incentive program. Now, lawmakers are looking to court Hollywood. A bill introduced in the state legislature on March 7 proposes to supplement Texas’ existing grant program with a new, uncapped scheme targeted at big-budget projects of at least $15 million.

The proposal, if passed, would launch the state into the upper echelon of jurisdictions that offer film and TV tax credits. It comes as Southern states continue to amend and improve their film and TV tax credit programs in the fight to host productions.

New Mexico, armed with refundable tax credits of 25 to 35 percent, has quickly become known as a production hub after hosting Breaking Bad, Better Call Saul and Stranger Things. A bill introduced in February proposes to double the uplift for filming in rural areas to 10 percent and adjust the cap on the ceiling of the program by $10 million a year to keep up with industry growth and inflation.

Netflix and NBCUniversal have both built production studios in New Mexico, committing $2 billion and $500 million, respectively, to produce content in the state over the next ten years. California-based 828 Productions will join them after it constructs a new full-service film and production shop.

Oklahoma and Louisiana have also garnered reputations as attractive filming destinations in their own rights. Louisiana is one of just a handful of states with a nine figure cap on its program, offering a base 30 percent tax credit with a generous project cap of $20 million.

Texas’ stiffest competition, if the bill is passed, would come from Georgia, which has already cemented itself as a premier filming destination. After flirting this year with a proposal that would’ve capped its incentive program, the state in 2023 doled out a record $1.3 billion in tax credits to productions.

It appears that there’s more of an appetite to augment the Texas’ film and TV tax incentive program on both sides of the aisle than in years past when similar efforts grounded in resistance to giving Hollywood tax breaks flopped. Rep. Four Price, an Amarillo Republican who authored the bill, says there’s “growing interest in content production” in the state.

Under the proposal, the transferable tax credit starts at 30 percent of a production company’s in-state spending, not including wages, and could reach as high as 42.5 percent depending on uplifts. Twenty percent of wages for non-Texas residents and 35 percent of wages to Texas residents qualify. On uplifts, there’s a 10 percent add-on for episodic TV series of three or more episodes with proof of distribution, a 2.5 percent bump if a production spends at least 25 percent of the project’s filming days in an economically distressed area and a 3 percent increase for post-production spending in the state.

The perception on tax credits in Texas is changing, at least in part due to Taylor Sheridan’s Yellowstone, which shot in Venus. The series reinvigorated the sleepy town’s economy with tourist dollars and other spending that comes with a production, including catering, lodging and transportation.

Fort Worth could be the epicenter of Hollywood in Texas. The city just miles from Dallas could be home to the expanding Sheridan-verse, seven Texas-centric shows either airing or in development from the Fort Worth-native.

In February, Texas Lt. Gov. Dan Patrick said: “My goal is for Taylor to move all of his TV and movie production to Texas. Working together, I think we can get it done.” (Presumably this would include Sheridan’s 6666, an upcoming Paramount+ series set at a Texas cattle ranch.) That same month, Mansfield officials approved a $70 million studio development project that will include soundstage clusters to host medium to large-scale productions.

“What they’re doing is responding to the industry,” 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. “If you want productions to come, you have to work with their budgets.”

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