New York Increases Film Incentives with New Budget

News Summary

Governor Kathy Hochul has signed a new budget that enhances incentives for film and television production in New York. The budget includes a 30% base tax credit, significant funding allocations for both independent and larger projects, and introduces several new incentive features aimed at maintaining competitiveness against states like California. These changes are designed to stimulate local economic growth and attract more productions to the state.

New York—Governor Kathy Hochul has officially signed the delayed state budget, significantly increasing incentives for film and television production. This new budget is the result of extensive discussions, particularly in light of rising competition from other states, notably California, which is also considering enhancements to its incentives.

The updated budget includes substantial incentives that are effective until 2036, after passing through both the Assembly and State Senate. The core of the budget features a base tax credit set at 30%, which may see regional increases, backed by an annual funding allocation of $700 million. This marks a $100 million increase dedicated specifically to independent projects, defined as productions not predominantly owned by publicly traded companies.

Key specifics of the funding allocation include $20 million reserved for projects with budgets under $10 million and $80 million set aside for larger productions exceeding $10 million. To streamline the application process, each production company will be limited to submitting two applications per year.

New Incentive Features

The latest budget introduces several notable changes to the existing incentive framework:

• Production Plus Program: This initiative provides additional credits for larger productions that spend $100 million or more within New York.
• Above-the-Line Labor: The previous $500,000 cap on above-the-line costs has been removed, though a 40% cap on below-the-line costs remains in place.
• Post-Only Credit: Productions can now qualify for incentives if they spend $1 million in New York or 75% of their total post-production budget.
• VFX/Animation-Only Credit: The spending requirement for eligibility has been lowered from 20% to 10% for visual effects and animation work in New York.
• Accelerated Credit Recovery: This allows productions to claim tax credits in the year they are allocated, rather than having to wait for subsequent years.
• Music Scoring Incentive: A new 10% credit has been introduced for music scoring costs, contingent on at least five musicians working in New York.

Context and Implications

The signing of this budget comes amid growing pressure from competitors in the film and television industry. California is currently contemplating an increase in its incentives cap from $330 million to $750 million and is working to modernize what constitutes qualified productions. This response highlights the intense competition to attract film and television projects to different states.

There is a prevailing concern regarding production spending in New York, projected to decline by 15% compared to 2019 levels, with applications for tax credits also decreasing. New York’s existing incentive program is oversubscribed, leading to worries about delays in the allocation of credits, which lawmakers are addressing through potential revisions to the tax incentives and evaluation of their effectiveness in delivering returns on investment.

The recent changes have received support from various stakeholders in the industry. The Commissioner of NYC’s Mayor’s Office of Media and Entertainment expressed optimism about maintaining New York’s competitiveness in an evolving landscape. Additionally, the chairman and CEO of the Motion Picture Association acknowledged the expansion as a positive development for job creation and local economies.

As the landscape of film and television production continues to evolve, the newly signed budget in New York sets the stage for increased activity and competitiveness, aiming to retain and attract productions while stimulating local economic growth.

Deeper Dive: News & Info About This Topic

• Deadline: New York Film & TV Production Incentives
• The New York Times: Film Industry Tariffs
• Variety: New York Film Tax Incentives Proposal
• Wikipedia: Film in New York
• Google Search: New York Film Tax Incentives