How do tax credits work in film?

The idea behind a film tax credit is pretty simple: by moving production to a state, you’ll be able to save money on taxes owed, or get some other perks in exchange for shooting on location there. Of course you may have to use a certain amount of local vendors to qualify, but every offer is different.

How does a film budget work?

A budget is typically divided into four sections: above the line (creative talent), below the line (direct production costs), post-production (editing, visual effects, etc.), and other (insurance, completion bond, etc.).

What does the budget of a film include?

In general, the budget includes all costs relating to the development, production, and post-production of a film. Thus, the budget includes, for example, costs of acquiring the script, payments to talent, and production costs. The budget does include self-charged “producer fees” paid to the producer.

What states have film tax credits?

Alabama, New York, North Carolina, Ohio and Utah are among the states that have adopted or expanded film tax credits in the past 18 months. Even California finally joined the club.

Does budget include actors salary?

A movie’s budget will include all the actors’ salaries, but it doesn’t include the percentage of the box office gross or net receipts that actors may have negotiated to receive on top of their salary.

What is the most expensive part of a movie budget?

Above-The-Line It’s generally the most expensive section of your movie budget because that’s where you’ll be paying the key members of your production — such as the screenwriter, director, producer, cinematographer, and talent.

How does Section 181 work?

Section 181 allows for the expensing of production costs associated with certain qualified film, television, and theatrical productions (subject to a limit of either $15 million or $20 million) as and when incurred, as opposed to recovering such costs over the useful life of the production.

What are film tax credits and how do they work?

How do film tax credits work anyway? Also known as movie production incentives, they are tax benefits offered on a state by state basis throughout the United States to encourage in-state film production. Brought about in the 1990s, the state programs were a response to Canada film tax credit incentives.

Why do States give up tax revenue to film filmmakers?

By giving up tax revenue, states gamble that they’ll see more economy activity that they’ll make up the tax revenue in droves. Shooting locations can later become tourist spots.

What budgeting software do film producers use?

On larger film sets it is the line producer or unit production manager who prepares the film’s budget, and to do this they may use film budgeting software such as Movie Magic . But budgeting software can be expensive and for many projects, it makes sense to use a free template like the one we’re going to provide here :

What is the tax credit for moving a movie to California?

California tax credit incentives. California tax credits include: 20 percent tax credit on a feature film with a budget of $1-75 million or a miniseries with a $500,000 minimum budget. 25 percent tax credit for a TV series moving production from an existing state to CA.