Essential Guide: NY Film Tax Credits | Wrapbook

Essential Guide: NY Film Tax Credits

13 May 2020 | Tom Waddick

Whether you are producing a blockbuster action feature or a small, indie commercial, your goal as a producer is always the same: save as much money as possible.

A great way to do that? Take advantage of film production tax credits.

In this article, we will break down the New York film tax credit program: what it is, how to apply, and how a NY film tax credit could help save your next production money.

What are film production tax credits?

Film production tax credits are tax benefits offered throughout the United States to encourage in-state film production.

These tax credits for film started in the 1990s, after similar Canadian incentives sent movie productions packing for the land of maple and hockey. Since then, states have offered increasingly competitive incentives in order to win productions away from other states.

In this article, however, we will focus specifically on the New York film tax credit program.

What kind of tax incentive is the NY film tax credit?

While film industry tax incentives cover a broad range of things from fee-free locations, to sales tax exemptions, to lucrative cash grants, New York’s primary method of incentivizing film production is film production tax credits.

Film tax credits cancel a portion of the income tax owed to the state by the production company. But a lot of production companies are limited purpose business entities and have little-to-no income tax liability. If your production company falls into this camp, don’t sweat it!

A film tax credit, technically, has nothing to do with tax — these film industry tax incentives are simply spending programs which use state revenue services as a filing and payment agent. In essence, they’re rebates, and the exact amount of your film tax rebate is based on a number of eligible expenses.

Below, we’ll walk you through all the requirements and eligible expenses for the New York film tax credit program.

But first, it’s worth pointing out that the NY film tax credit is refundable.

If a production company does not have any tax liability, the full amount of the credit is rendered as a tax refund. If the production company does owe income tax, the amount owed is first reduced by the amount of the credit. In both cases, productions can expect to receive New York tax breaks.

It’s also important to note that the NY film tax credit is non-transferable.

Non-transferable tax credits cannot be resold; they must be used by the production company to whom they were awarded.

But which companies get awarded these coveted New York film subsidies? Well, that brings us to…

NY Film Tax Credit Eligibility

The NY film tax incentive is a 30% tax credit on qualified costs incurred in New York State for eligible productions that fall into one of four categories:

  • Feature films
  • Episodic television series
  • Television pilots and presentations
  • Television movies and miniseries

An extra 10% NY film tax credit is available for labor costs incurred in Upstate New York.

Additionally, an increase of 5% credit, for up to a 35% total NY film tax credit, is available for post-production costs incurred in Upstate NY, outside of the Metropolitan Commuter Transportation District.

So if you do the math right, your production could see nearly half of its budget returned through the NY film tax incentive program. That’s a lot of extra spending cash.

Some additional criteria your production must meet in order to qualify for these New York film subsidies…

  • If the majority of your principal photography is shot in or near New York City — specifically in Westchester, Rockland, Nassau, or Suffolk county or any of New York City’s five boroughs — your production must have a minimum budget of one million dollars.
  • If the majority of principal photography is elsewhere in New York State, your production must have a minimum budget of $250,000 to qualify for a NY film tax credit.

Beyond this helpful rule of thumb, eligible productions are tiered into two categories based on the size of the production. Productions in each category must meet different criteria to be eligible for New York State tax credits.

Beyond this helpful rule of thumb, eligible productions are tiered into two categories based on the size of the production. Productions in each category must meet different criteria to be eligible for New York State tax credits.

Level 1 Productions

Cost less than $15 million, and are produced by a company owned less than 5% by a publicly traded entity. In other words, “small” and “indie.” Level 1 productions must have a set and shoot at least one day in New York State to be eligible for NY film tax credit. 75% of total expenses before post-production must be in New York State.

Level 2 productions

Cost more than $15 million, and are produced by a company owned more than 5% by a publicly traded entity. These productions must also shoot on a specifically built set. At least 10% of principal days must be at a qualified production facility (QPF) in New York State and 75% of total expenses before post-production must be in New York State in order to qualify for a NY film tax credit.

Generally, productions that are ineligible for a NY film tax incentive include documentary film, news or current affairs programs, interviews and talk shows, variety shows, commercials, and music videos.

A full list of ineligible productions, along with a more detailed breakdown of eligibility requirements and New York film tax credit FAQ can be found on the New York State Tax Credits’ website.

What expenditures qualify for NY film tax credits?

The simple answer? A lot. Most broadly, property and services used or obtained in New York State can all be covered by the New York film subsidies.

This includes most below-the-line production costs such as set construction, crew, camera equipment, kit fees, grip equipment, props, makeup, wardrobe, facility, and pay for background talent.

Post-production costs such as film editing, sound design and effects, and visual effects may also qualify for the New York film tax incentive with production credit available for productions that film a significant portion outside of New York State but intend to contract some or all of post-production in New York.

So even if your production requires you to shoot on-location in the Himalayas or send your second unit to a tropical island, you may still be eligible for New York State tax credits.

Wages and writing costs scripts are usually excluded.

Applying for a NY film tax credit

The NY Film Tax Credit program accepts rolling applications, with the recommendation that all applications are submitted at least 10 days prior to the first day of principal photography.

Applicants are asked to complete a project summary form and submit it along with a budget and calculated budget cost qualifier as part of their initial application.

When the initial application is complete, the New York Film Tax Credit Program office will notify the applicant and that they can proceed toward a final application.

Most productions will then proceed onto production, and once post-production is complete, submit their final application, with more extensive budgeting documentation. Once this final application is complete, the application is ready for audit. And following a successful audit, the NY film tax credit is certified and issued to the applicant listed on the final application.

Full details, including guidelines and checklists for the NY film tax credit application can be found here.

In all cases, you will be required to tag and track your production budget, so it’s important to make sure you have a good budgeting workflow in place.

Wrapping Up

Utilizing a NY film tax credit can be an excellent way to offset the cost of your film. While the New York film Tax Credit Program process may be selective, once you’ve been awarded a tax credit, you can write off almost anything.

Got a lingering question about tax credits in New York State? Drop us a line at success@wrapbook.com.

Tom Waddick

Tom is a filmmaker, producer, and marketing specialist based in Los Angeles.

The Best Production
Payroll Company

Pay your cast and crew quickly and compliantly.

Wrapbook calculates timecards, witholds taxes, handles unions, and processes payments in user-friendly app.

Learn More
Film Payroll