There are a multitude of benefits to filming in a state which offers some form of tax incentive. In general the term “tax incentives’ refers to a broad category of benefits which offer rebates and/or remove a portion of the income tax owed by the production. Some states offer filmmakers “transferable tax credits.” Transferable credits allow production companies which generate tax credits greater than their tax liability to sell those credits to other taxpayers, who then use them to reduce or eliminate their own tax liability. Alternatively, ‘refundable credits’ allow the production company to be paid the balance in excess of the company’s owed state tax. Cash rebates are paid to production companies directly by the state, usually as a percentage of the company’s qualified expenses. Finally, some states offer sales tax exemptions on certain in-state expenditures. 

In order to qualify for these tax incentives, production companies often meet minimum spending and/or hiring requirements in-state. For example, in Alabama, productions which hire residential workers earn a 35% tax incentive, and all other qualified workers get a 25% tax incentive. Any other in-state expenses incurred also qualify for a 25% tax incentive.

New Mexico, home to Netflix’s Albuqueue Studios, provides a 25% incentive for all local spending and residents and 15% for certain approved below-the-line non-residents. 25% on non-residents who are only on-screen talent that meet certain criteria.

Georgia – perhaps the poster-child for film tax incentive programs, given the number of productions which now film in the state – offers a 20 % base transferable tax credit, an additional 10% Georgia Entertainment Promotion that can be earned by including an embedded Georgia logo on approved projects. Georgia tax incentives are particularly beneficial because, unlike most states, both resident and non-resident workers’ payrolls qualify for the state’s tax incentive program, there are no limits or caps on Georgia spending, and no sunset clause. 

First passed in 2005, Georgia’s film tax credit is one of the oldest and most successful examples of film tax credits boosting the film industry in a state. The film industry in Georgia is one of the largest in the country, mostly due to the state’s generous film incentive program. In 2016, it overtook California as the state where the most productions filmed. Seven hundred films have been produced in Georgia since 1972 – nearly all of those after 2005, when the tax incentive went into effect. In 2021 alone, 21 feature films and 45 independent films were produced in the state of Georgia. 

According to the Georgia Department of Economic Development, the impact of the film incentive program on the Georgia economy has been significant. The average Georgia filmed production hires about 150-175 local employees, with larger-budget productions hiring about 200-250 local employees. The average feature filmed in the state has a production budget of about $41.7 million dollars, with the average amount of BTL in state spending clocking in between 60 and 70 percent. 

Given the wide range of benefits that other states have seen in recent years, Michigan is looking to jump back into film production. Under the revised Multimedia Jobs Act, Michigan would offer filmmakers a 25% tax credit for in-state spending and another 5% if the film includes a “Filmed in Michigan” logo. Additionally, studios can secure an additional 30% credit by hiring Michigan residents.

The new tax incentive program increases the requirements on production companies and sets out certain minimum spending requirements in order to qualify for the program. For instance, projects longer than 20 minutes need to spend at least $300,000 to qualify for the credits. Shorter films have to invest a minimum of $50,000.

The proposed Act is being hailed as a “complete 180” from the original, failed pilot program back in 2008. This Act strengthens the requirements on production companies and draws clear lines between film productions and the benefit to the Michigan taxpayer. 

Supporters, such as Alexander Page, the legislative chair of the Michigan Film Industry Association, are calling the Act a “jobs bill” which would allow a greater number of productions to be filmed in Michigan and which would stimulate the Michigan film industry. “Instead of people coming to Michigan and just filming a couple of days for some exterior and then going elsewhere to shoot, we want them to come, stay and film here.” He told the Detroit Free Press. 

Page noted that most production companies will not film in locations which do not offer at least some form of tax incentive. 

“We’re totally being left on the sidelines,” He said.

There is support for this bill on both sides of the aisle. Rep. John Roth, an Interlochen Republican is the lead sponsor of the House version of the Multimedia Jobs Act. 

“I think it’s kind of silly if we’re teaching these courses in our universities that we don’t have any jobs for them,” Roth told the Michigan Bridge – noting that many Michigan colleges and universities offer film and production degrees. “I think we could actually have an industry. But we have to incentivize to begin with to get people interested.”