News Summary
New York State has increased its film and television tax incentives, raising the base incentive from 25% to 30% and increasing the budget for incentives. This initiative aims to bolster the film industry amid declining production activity. A new Production Plus Program has been introduced, as well as modifications to eligibility for tax credits, to enhance competitiveness with regions like California and Canada. The new plan aims to stimulate local economies and sustain job opportunities in the entertainment sector, amid ongoing political discussions surrounding the industry.
New York State has officially expanded its film and television tax incentives following the signing of the delayed state budget by Governor Kathy Hochul. This initiative comes in the wake of a nationwide decline in production activity and aims to enhance New York’s competitiveness in the film industry against states like California and New Jersey. The new film incentive program is set to run through 2036 and is expected to stimulate local economies significantly.
Under the revised program, New York has increased its base incentive for productions from 25% to 30%. The state has also elevated its annual budget allocation for film incentives from $700 million to $800 million, with a newly established pool of $100 million specifically dedicated to independent projects. This funding is categorized into two groups: $20 million for projects with budgets under $10 million, and $80 million for projects with budgets of $10 million or more. However, projects will not be eligible to receive funding once the $100 million allocation has been exhausted for the year, and independent production companies are limited to two applications annually.
The updated incentives also include a Production Plus Program, which enables companies with total production costs exceeding $100 million to request a 10% increase in their incentives until 2028. Furthermore, the stipulations concerning Above-the-Line (ATL) labor costs have been relaxed, lifting the previous cap of $500,000 per individual, though the overall cap of 40% remains in effect for Below-The-Line (BTL) costs.
Changes to Credit Eligibility and Additional Incentives
Significant modifications have been made to the eligibility requirements for various credits. The rules for the Post-Only Credit now allow productions to qualify for credits if they spend at least $1 million or 75% of their post-production budget in New York. Additionally, the criteria for Visual Effects (VFX) and Animation credits have been lowered from requiring 20% of the budget or $3 million in spend to only 10% of the budget or $500,000 in spend.
From January 1, 2025, productions will also be permitted to claim their credits during the allocation year, significantly expediting the recovery process for these funds. Furthermore, an extra 10% incentive will be available for music scoring costs when five musicians perform in New York State, thereby encouraging local talent engagement.
Competitiveness and Economic Considerations
The state’s decision to enhance these incentives follows a concerning trend in the industry, where overall production spending in New York is projected to decline by 15% since 2019. This decline has coincided with a striking 53% decrease in tax credit applications compared to five years ago. Industry experts cite heightened competition from California—where the annual incentive cap has been raised to $750 million—and from Canada, with British Columbia planning to boost its film tax incentive to CA$1.2 billion.
The expansion of tax incentives is seen as vital for preventing further economic fallout from decreased film production, which directly impacts jobs and local businesses. Experts from the Motion Picture Association have underscored the importance of these initiatives, noting the essential role of the film and TV industry in maintaining vibrant local economies.
Political Context
This signing occurs alongside significant political discussions, including a proposal from former President Donald Trump suggesting tariffs on content produced outside the U.S., which could further impact the industry landscape. Trump’s plan includes new federal tax credits for U.S. productions and a proposed 120% import tax that could affect international film cooperation.
As New York seeks to solidify its position in the ever-evolving entertainment landscape, the updated tax incentives reflect a strategic effort to attract and retain production activities, amid both regional and international competition.
Deeper Dive: News & Info About This Topic
- Deadline: New York Film TV Production Incentives
- New York Times: Tariffs and the Film Industry
- Variety: New York Film Tax Incentives
- Encyclopedia Britannica: Film Tax Incentives
- Crain’s New York Business: Keep Film Industry Tax Incentives
