In 2009 the California Film Commission, a one-stop office for filmmakers, created the Film and Television Tax Credit Program to encourage in-state film production. This year the Commission further incentivized filmmakers to stay in California by expanding the program and increasing funding from $100 million to $330 million.
The updated program offers tax credits for each project that provide line worker wages and help fund equipment vendors. Applications are ranked from highest to lowest based upon their “jobs ratio” against similar projects.
For example, television projects are ranked against other television projects while big-budget films are ranked against other big budget films and so on. Tax credits will be awarded to those productions in each category with the highest ranking. The “jobs ratio” is a specific calculation used to determine how much is being spent on wages for qualified production activity in the state during the filming of the specific project.
For the second round of the state’s expanded Film and Television Tax Credit Program, the California Film Commission received 254 applications.
Future application dates are as follows:
- 30 – Dec. 6, 2015 for Television Series and Mini-Series
- 11 – 24, 2016 for Independent and Non-Independent Feature Films
- 15 – 21, 2016 for Television Series and Mini-Series
Credit allocations will be issued after a three to four week review. Until then, principal photography cannot begin prior to the issuance of the credit allocation.
For the current fiscal year, the state has announced that funding for the Film and Television Tax Credit Program will be:
- 40 percent to new television series and mini-series
- 5 percent to independent projects
- 35 percent to non-indie feature films
- 20 percent to relocating television series
As a reminder, eligibility for the Film and Television Tax Credit and the percentage of credit that can be allocated to a particular project is based on the following criteria:
Eligible for 20-percent Non-Transferable Tax Credit
- Feature films with at least a $1 million budget. The credit allocation applies only to the first $100 million of qualified expenditures.
- Movies of the week and miniseries with at least a $500,000-minimum budget.
- New television series for any distribution outlet with at least a $1 million budget per episode.
- Television pilots with at least a $1 million budget that are at least 40 minutes in length.
Eligible for 25-percent Transferable Tax Credit
- Independent projects with at least a $1 million-minimum budget. The credit applies only to the first $10 million of qualified expenditures.
- Relocating television series with any episode length that filmed its most recent season outside of California and that has at least a $1 million budget.
About Akash Sehgal (Director of State and Local Tax at GHJ)
Akash leads the firm’s state and local tax practice with a focus on multistate income and franchise tax, sales and use tax and credits and incentives. He has over 17 years of Big Four state and local tax experience in Los Angeles and Seattle.
Akash assists his clients with complex state and local tax issues related to transactional planning, mergers and acquisitions, general day-to-day consulting and compliance. His experience includes handling state tax issues in California, Oregon, Idaho and Washington and local city taxes including the Los Angeles City Business Tax. He is a frequent speaker for a variety of tax associations including Tax Executive Institute (TEI) and the Council on State Taxation (COST).