State Filming Incentives are the single most important influence on the industry today, but most actors don’t understand them, and don’t know why it would affect them. We’re here to provide you the short, sweet, and plain English version.
What is a Film Incentive?
Film incentives are state-funded programs passed by individual states to encourage Hollywood productions to come to their location. When the work leaves the expected or usual location, it is commonly called “runaway production”. This is the practice of taking film production to other non-traditional areas with a more favorable financial environment (cheaper labor, tax credits, tax rebates, etc).
Currently, 32 states (plus Washington D.C., Puerto Rico and the US Virgin Islands) have some sort of “film incentive”. Each of them are hoping to lure production to their state so that the costs related to the production will infuse money into their local economy. No state can really compete with California, New York, or Vancouver in terms of technical skill and experience of the workers, so the states have responded by saving studios a bundle of money in taxes instead. California and New York see this as “runaway production” and have passed their own filming incentives. Georgia has the largest incentive program by far.
California raised their budget from $100M to $330M in 2014, and by 2022 it was $420M. The governor is currently proposing extended that through 2030, with a couple of changes: capping it at $330M but giving companies a refundable credit– meaning they could get the money back in cash. That’s a new tactic. In short, the states are battling for Hollywood’s production dollar and a savvy producer is going to do the most financially lucrative thing possible.
Not to be outdone, in 2023, New York announced a $700M and they announced that “above the line” workers (that’s the creatives: producers, directors, and principal actors) will be eligible for tax breaks for the first time, and their credit will be to 30%.
The incentive package for each state is a little different, but typically the programs have four components: local hiring requirements (usually applying to crew and background performers), a tax credit (usually 15%-40%), a state logo in the end credits of the film to encourage tourism, and a minimum amount of spending in the local community (for things like restaurants, hotels, props, and equipment rentals). In addition, some states such as North Carolina, Michigan and Georgia have built physical studios to encourage film makers to find a more permanent home there.
The current hotspots are Georgia and the United Kingdom. Georgia offers a 30% tax credit and is the new home to Marvel movies like Black Panther, along with series like Stranger Things, Ozark and The Walking Dead. London, UK and Ireland are getting into the game as well with the combination of creative “tax relief” credits and a good exchange rate. We are told that it is now cheaper to move an entire multi-million dollar Los Angeles feature film to London than it is to shoot in LA.
Film incentives seem to work, at least temporarily. According to Georgia’s Entertainment Office, the industry produced 412 TV and film projects in fiscal year 2022 They spent $1.4 billion in tax credits in 2022 in order to lure those productions, by far the most of any state. For perspective, that’s slightly more than Georgia spends on their prison system. They believe that this investment has infused 4.4 billion that’s with a B) of economic impact into the state. That’s big bucks. Oddly, the Georgia film incentive program has spurred a cottage industry of producers selling their unused tax credits to other producers.
The news isn’t all good though:
- Some critics say that the affect is only temporary, because most jobs being “created” are just short term. Not to mention, when the state next door offers a better incentive, the production easily flees there. For example, the Warner Bros. TV series Lucifer was filmed in Vancouver until 2017, when California lured it away to Los Angeles. A 2016 USC study called “Lights, Camera, but No Action?” contended that film incentives were a giant waste of money and that their use showed an increase in motion picture industry jobs. 13 states have ended their film incentive programs since 2009.
- Even when it seems to be working, the money pot is not bottomless. New York’s hugely popular program ran out of money in 2009 after luring shows like Ugly Betty from Los Angeles. Film makers who planned to film there had to re-group and move to other states in order to keep within their budget. Many states have instituted caps on their funding, so the productions that get there first, or have political connections, win.
- Ethical issues abound. North Carolina’s film office was criticized in 2007 when Dakota Fanning’s controversial film “Hound Dog” was filmed there, using a government subsidy. Many felt that the state should not be encouraging child exploitation in the name of art, and that the filming incentive created a conflict of interest when it came to investigating complaints. Iowa’s film program was suspended in 2011 under allegations of mismanagement, but by 2021 it had come back with a 25% rebate program. In Pennsylvania, M. Night Shyamalan’s 2010 film, The Last Airbender, garnered $25 Million in tax credits and many people felt that the cash payment was just contributing to the profits of Paramount Studios when the tax payer money could have been used for a more worthy cause during the Great Recession of that year. In 2018, California Senator John Moorlach introduced a bill calling for more transparency within the film incentive program.
- Independent film makers are frustrated at the endless sea of paperwork, waiting lists (because funding has run out), and local officials who don’t really understand how the industry works.
Why Should I Care?
Three reasons: location, safety and legislation.
Film Incentives may be creating job opportunities in your neighborhood. Yes, it is true that the big leads may be cast from Hollywood, but the career building roles, the co-stars and supporting characters, will be cast in smaller markets. Opportunities for kids to succeed locally abound. Advertising yourself as a “local hire” can be a big selling point to producers who are desperate to fill their quota of locals. Get a local agent. You may want to forego the trip to Los Angeles and research the states around you instead.
Parents need to be aware that child labor problems typically follow filming incentives. The state’s “investment” in a film may color their willingness to investigate labor violations or safety issues as politicians want to make it appear that the economic impact of the tax program is working. States lure filming, but very few have any guidelines specific to the entertainment industry for work hours, education or child safety on set, and often the crew members aren’t aware of child needs. You aren’t in an area with much historical child actor experiences anymore. Look for union sets if you can, as SAG regulations are at least close to California’s tight safety regulations. And know that YOU will have to be your child’s best advocate; negotiate for everything you need, and speak up for industry standards.
Trust account legislation typically follows a couple of years after a filming incentive. We’ve seen it in New Mexico, Louisiana, Florida, New Jersey and several other states.
When production moves in, states with no child labor guidelines for the entertainment industry quickly figure out that they should create some structure to deal with the problems they encounter. This is often problematic, because legislators don’t understand how to structure those kinds of laws. They don’t have the practical first hand experience, and often ‘piece meal’ legislation together from existing laws in other states. These laws affect our children’s money, education, and work hours. Eventually, we’ll end up with a patchwork of mis-matched laws that we must all abide by, a different set in every state. There isn’t much we can do about this pattern of behavior, except be aware that it is happening and we encourage you to get involved when legislation is proposed in your state. Voice the concerns you have based on your own experience. With 36 states sponsoring tax incentives, the new laws will be close behind.
It is often easy to forget that the entertainment biz really IS an industry. That means profits, losses and budgets are critical to the growth and survival of the entities in it. We may be so focused on our teeny little corner of the world (getting an audition) that we forget how many other things are at play, and the affect filming incentives have on our employers, the producers. It’s just good business to watch the trends, and wisely increase your opportunities.
A State By State Interactive Map of Film incentives for Film Makers (make sure to research individual state links as this is likely to become outdated quickly):
Media Services Interactive Map
SAG Listing: https://www.sagindie.org/resources/states/
February 1, 2023 — New York Proposed to Expand Tax Credit to $700M by Gene Maddaus for Variety
February 28, 2023 California 2023-2024 Budget: California’s Film Tax Credit
California’s extends tax credit to 2025 — LA Times by David Ng
January 10, 2023: California Gov Gavin Newsom Seeks to Make Tax Credits Refundable Through 2030-2031 Year by Kate Kilkenny for The Hollywood Reporter
July 2021 — California more than triples the film incentives to support sound stages, diversity: Massive $330 Million Film, TV Production Tax Credit Passes House and Senate — California Globe by Evan Symon
March 8, 2023 —Illinois Tax Incentives Up to 30% by Zoe Hewitt for Variety
Political Hot Button– 2018 Governor Candidates in Florida on the failed Florida industry — Deadline.com article by Dave Robb
New Jersey tax credit returns with $85M tax incentive for 2018 – 2019 Variety article by Addie Moorfoot
April 28, 2023 New York to Make Major Changes to Tax Incentive Program by Winston Cho for Hollywood Reporter