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Film Tax Credits in New England: Not Just for Hollywood

Learn about the tax credits in Massachusetts, Rhode Island, Maine, and Connecticut that attract in-state filmmaking

4 Nov , 2019  

Written by Paul Desimone | Posted by:

In this article, NewEnglandFilm.com takes you through what film tax credits are, how they work, and what specific incentives you can receive, state by state, by filming in New England. And it’s not just for Hollywood filmmakers…

Have you ever wondered why so many Hollywood films are being shot in Massachusetts? One reason might just be the state’s tax credits. But what many independent filmmakers don’t realize is that tax credits are not just for Hollywood movies—they too can often benefit from incentives to shoot films in-state. In this article, we’ll review what the tax credits are, how they work, and what specific incentives you can receive, state by state, by filming in New England.

First, it’s important to understand what tax credits are. As many of us in the film industry have seen, films provide an essential source of revenue to the state, not only by creating film jobs, but also by building infrastructure, developing industry businesses, and promoting tourism. Many states have recognized the financial ripple effect of movie production and have offered tax incentives to draw productions to the state. Tax incentives take the form of a rebate of funds back (“tax credits”) so that you can take a deduction for the amount off your taxes. So, for example, if you spend $200,000 on a qualifying production in Massachusetts, you’ll get 25% (or $50,000) back that you can deduct on your taxes. Of course, knowing that many filmmakers may live in another state (and hence not paying Massachusetts state income taxes) or that their income may not be that high, there are ways to transfer that money to someone else so that you can still access the rebate.

Working with a Tax Broker

In Massachusetts, Connecticut, and Rhode Island, you can sell tax credits. Some wealthier business owners might need a 25% tax credit, while you might not because you’re only going to make a few thousand dollars. These business owners can purchase your tax credits from you using a broker, and the brokers get a portion of the credit (2-5% depending on the total).

Let me break it down in simpler terms. Let’s say I make a movie in Massachusetts. We film entirely in the state and spend $100,000 on production.  I can contact this third party firm and start to negotiate what I need. I might use the tax credit as a way to obtain a loan from a bank or investor. Or I can sell the tax credit to a large company that needs 25% tax credits, or I can use it for myself and save money on taxes that I will end up paying.

Tax Incentives in New England

Of the six New England states, two—Vermont and New Hampshire—do not offer any incentives—Vermont and New Hampshire. Each of the other New England states—Massachusetts, Rhode Island, Connecticut and Maine—all offer some incentives for filmmakers. As you’ll see in the chart below, some state incentives are more compelling than others. For example, Massachusetts requires that you spend $50,000 to qualify for 25% tax credits, while in Connecticut you must spend over $100,000 to get your 10-15% back.

See the chart below for a breakdown of each state’s film tax incentive programs.

Massachusetts
Rhode Island
Maine
Connecticut
Minimum In-State Spending
50k
100k
75k
100k
Tax credit
25%
30%
5%
10-30%
% shot in state
(see eligibility below)
51%
N/A
50%
Credits
25% production credit; 25% payroll credit; sales tax exemption
30% of spending
10-12% wage rebate (up to $50K) and 5% production spending; accommodations tax exemption (for continuous stay of 28 days or more)
10% production expenses or costs of 100k-500k; 15% for 500k-1 million; 30% over a million
Eligibility
Minimum in-state spending, plus at least 50% of total budget or over 50% of principal photography days in Massachusetts.
Minimum in-state spending, plust least 51% of principal photography in Rhode Island.
Minimum in-state spending.
Minimum in-state spending, plus at least 50% principal photography days within state; or Expends at least 50% of postproduction costs within state; or Expends $1 million or more in postproduction costs in state.
Use
To claim against Mass taxes or cashed out with Commonwealth at 90% of face value after tax liabilities satisfied or transferred at market rate.
To claim against RI taxes.
To claim against CT taxes or sold, assigned, transferred to third party.
Sunset date
2023
2027
none
none
Use within
5 years
3 years
N/A
5 years
Annual Cap
none
$15 million; raised to $20 million in January 2020
none
none
Project Cap
none
$7 million, which may be waived for film and television productions
none
none
More info
Massachusetts Film Office
RI Film & TV Office
Maine Film Office
Connecticut Department of Economic and Community Development

Ok, I’m Ready… So, What’s Next?

If you think your budget meets the minimum for the state you plan to film in, then you should do the following:

  1. Reach out to your state film office to make sure that you have a clear understanding of the tax credits and how you can qualify and access them. You have to register your film in advance with the state film office and have your production approved for the credit, before you spend your money in state.
  2. Consider how you will track spending—Are you using a payroll company? Do you have a credit card with the film’s name or production company to track spending?
  3. Decide how you want to use the tax credits—if your income is high enough, you might need the tax credit yourself. If not, you might want to consider working with a tax broker.

There are plenty of stipulations for each state’s program and the laws change over time—so do your own research and be your own advocate. After reading and writing this article, I have registered my own films for tax cuts! Maybe you will too…