State Film Production Incentives and Programs

2/5/2018

film crewHollywood has long been associated with America’s dominance in the motion picture industry. But, in the 1980s and early 1990s, a favorable currency exchange rate and government sponsored tax incentives lured film production from California to Canada. It wasn’t long before state policymakers took matters into their own hands to compete for film industry business.

Louisiana was the first state to adopt state tax incentives for film and television production in 1992. In 2002, Louisiana expanded its program and the state’s film industry began to experience strong growth. Other states responded to Louisiana’s success. By 2009, 44 states, Puerto Rico and Washington D.C., offered some form of film and television production incentives. However, the popularity of these programs has waned, and support for the film industry has decreased in recent years. In 2018, only 31 states, Washington D.C., Puerto Rico and the U.S. Virgin Islands continue to maintain film incentive programs, and several of these states are tightening the requirements for qualifying expenses and reeling in per-project and annual program caps.

Most states’ policymakers walk a fine line and try to balance film production incentives in ways that limit forgone revenue, yet still reduce the chances of losing the state’s film industry to competing incentive programs.

Since 2009, 13 states have ended their film incentive programs. Most recently, Wyoming and West Virginia eliminated film incentive programs. Wyoming allowed its program to expire, and a bill to reinstate it failed during the 2017 legislative session. On Jan. 29, 2018, West Virginia’s governor signed a bill passed by the Legislature to eliminate the states’ film tax credits. This action followed a January 2018 report released by the states’ legislative auditor that cited the credits’ minimal economic benefit to the state.

These actions mark a larger trend of states re-evaluating or paring back film incentive programs. In fiscal year (FY) 2018, Colorado, Maryland and Texas reduced the annual appropriation available for film incentive programs. Oklahoma reduced its annual program cap from $5 million to $4 million. Most notably, Louisiana, the pioneer of state film incentives, introduced a $150 million cap on the amount of credits that can be issued each year. This change was enacted due to increasing budgetary pressures in the state and the uncertainty uncapped film credits can create in budgeting.

While most states maintained the status quo, or reduced film incentives, a few states made slight augmentations to their programs. North Carolina, which switched from a tax credit to a grant program in 2015, increased its annual program cap to $34 million for FY 2018 and eliminated the program’s July 1, 2020 sunset date. Additionally, Utah and Virginia made small increases to the annual funds available for film incentives.

Going forward, the same trends of evaluating and reining in uncapped programs are likely to continue. Film incentives remain a driving factor in determining where a film is ultimately produced. Producers note that scripts will be modified to reflect the scenery if a state offers a particularly generous incentive. However, state legislators are seeking to balance these industry facts with the forgone revenues and unclear economic outcomes that state film incentive programs produce.

Additional Resources

  • 2018 State Film Production Incentive Programs | Please note: This table contains NCSL summaries of state film incentive programs only. For full details on eligiblity and requirements, please contact  the state's film office.