News Summary
Governor Kathy Hochul has signed a state budget enhancing incentives for film and television production in New York, aiming to attract more projects and compete with other states. The budget includes $800 million for production incentives, significantly benefiting independent films and expanding eligibility. New provisions include extended tax credits for large productions and adjusted standards for post-production expenses, reflecting the need for a more efficient allocation process. These measures are crucial in maintaining New York’s leadership in the entertainment industry amid increasing competition.
New York – Governor Kathy Hochul has officially signed a state budget incorporating extensive new incentives for film and television production, marking a significant move to enhance the state’s competitiveness in the digital content creation landscape. The budget, which has seen delays, includes provisions aimed at attracting more productions to New York, following a rise in competition from other states and a downturn in national production spending.
The newly signed legislation extends the production incentives through to the year 2036 and modifies existing terms to allow for increased eligibility and funding. Lawmakers approved the budget within the week after Hochul’s proposals were submitted to the New York Assembly and State Senate.
The expanded budget allocates a total of $800 million for production incentives, a notable increase from the previous amount of $700 million. Out of this total, $100 million has been specifically earmarked for independent film projects, which are defined as productions that are not primarily owned (51% or more) by publicly traded companies. This allocation will assist in bolstering the independent film sector, which has seen a significant decrease in applications for state tax credits—down 53% over the past five years.
Independent projects will have a cap of $20 million designated for productions under $10 million and $80 million for those above it. However, once the $100 million reserved for these projects is entirely allocated, no further applications will be accepted for that year. Additionally, independent production companies will be limited to only two applications annually.
The newly established Production Plus Program aims to provide larger productions with enhanced tax credits if their combined total-qualified New York production costs exceed $100 million from their two initial applications. Eligible productions can receive incentives of up to 40% until 2028.
Changes also include the removal of the prior $500,000 cap on above-the-line labor costs, although a 40% cap on below-the-line and vendor costs remains in effect. New eligibility standards for post-production credits will allow productions to qualify if they spend at least $1 million on post-production costs in New York or if 75% of their post-production budget is allocated within the state. The threshold for qualifying in visual effects and animation has also been lowered from 20% of the budget or $3 million spent in New York to 10% of the budget or $500,000 spent.
A key aim of these legislative modifications is to expedite the credit allocation process, which has faced criticism from producers due to frustrating delays. Furthermore, music scoring costs can now earn an additional 10% incentive if five musicians are employed in New York, which is anticipated to support local musicians and enhance the music industry within the state.
These recent developments come in response to increased competition from other states looking to attract film and TV productions. California is also in the process of expanding its production incentives, possibly raising its yearly cap from $330 million to $750 million and broadening the types of productions eligible for incentives.
The competitive landscape is further influenced by proposals from former President Donald Trump, who has suggested tariffs on foreign-produced content and introduced a new federal tax credit plan for U.S. productions. Industry stakeholders have expressed concern regarding a potential 120% import tax on foreign content, which could have significant ramifications for the market.
As New York continues to navigate the challenges presented by competing states and the changing dynamics of the entertainment industry, this budget and the expansion of incentives are viewed as critical steps toward maintaining the state’s leadership position in film and television production.
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