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Shiv Rajagopal is a filmmaker based out of Hong Kong & Los Angeles. With a background as a producer of indie films, music videos, and commercials, he writes about the entertainment industry at large. He is also the Co-Founder of Forgotten Films, an indie film company with a slate of films revolving around superheroes from the golden age of comics.
At Wrapbook, we pride ourselves on providing outstanding free resources to producers and their crews, but this post is for informational purposes only as of the date above. The content on our website is not intended to provide and should not be relied on for legal, accounting, or tax advice. You should consult with your own legal, accounting, or tax advisors to determine how this general information may apply to your specific circumstances.
In the modern era of filmmaking, choosing the right location is more than just a creative decision; it's a financial one.
In a landscape where financing films is increasingly challenging, producers are leveraging production tax incentives to bring their scripts to life. These programs help offset a portion of the budget, thereby mitigating the financial risks of filmmaking.
In this article, we will explore how producers can optimize their budgets by choosing the right locations, unpack the intricacies behind film tax incentives, and spotlight the key trends going into 2025.
This article is based on a conversation from the 2024 edition of the American Film Market’s The AFM Sessions, which was sponsored by Wrapbook. Watch the on-demand recording here for unique insights into the intersection of film finance and location management.
Ryan Broussard is the Vice President of Sales and Production Incentives at Wrapbook.
With over 16 years of experience in the entertainment industry, he specializes in developing and executing production incentive strategies. He has worked on both independent films and studio blockbusters and helped countless projects maximize their financial potential.
Jeffrey Greenstein is the founder of A Higher Standard, a production and sales company.
As the former President of Millennium Media, he brings over 15 years of experience along with an impressive filmography. Notable credits include The Expendables franchise, The Hitman’s Bodyguard, Hellboy, and more.
Over the past two decades, film tax incentive programs have exploded in popularity both in the United States and internationally. As a result, they have become essential in the film financing business.
However, choosing the right location—and tax credit program—requires more than comparing percentages. Production incentives are intricate, each with a unique set of rules and hidden complexities.
As Broussard explains, producers must, “Play matchmaker to get the perfect place for your perfect project. It’s not as simple as ‘that one gives me 30%, that one gave me 20%, so I should go to the 30%’ because that may not be the best place for you.”
To make the most of these programs, it's essential to understand the hidden factors that influence the production’s feasibility in a particular location. Here are some key factors to consider as you evaluate potential locations.
Understanding the type of tax credit is extremely important as it determines how and when the financial benefit is realized. There are three types of tax credits you will most likely come across:
Refundable tax credits provide the most direct benefit. Once the production is complete and a tax return is filed, the state will issue a refund check to the production company based on the tax credit certificate. It’s important to note that the tax credit can be converted to cash, offering greater flexibility with cash flow.
In this scenario, the governing body will issue a tax certificate that can reduce your in-state tax liability. If the production company doesn’t operate within the state, producers can transfer or sell these tax credits to a local company to convert the benefit into cash.
This type of tax credit can only offset in-state tax liabilities. Unlike the tax credits mentioned above, it cannot be sold or converted into cash, making it less beneficial to out-of-state production companies.
A well-trained cast and crew are the backbone of any successful production. Before choosing a location, it’s crucial to determine if the local area has a skilled workforce that can meet your project’s needs. Without it, producers will have to bring in out-of-state crew, which can increase costs.
Additionally, producers must consider the incentive program’s crew requirements. Many tax credit programs require spending on local crew and talent to qualify for the incentive. Therefore, understanding these requirements and planning ahead is essential to avoid unexpected costs like housing, per diems, or withholding taxes.
Production incentives are funded through taxpayer dollars, so the governing body will conduct an extensive audit before releasing any funds. As a result, payout timelines can be hard to predict, posing a challenge to producers managing a tight budget.
Greenstein shares an example of a movie he produced in New York to highlight this issue:
“I think we shot the film [...] in 2015 or 14, and I think we finally got the tax credit in 2021. As you can imagine, [...] the cost of the interest actually exceeded the credit we got back.”
Delays like this can cause serious cash flow issues, especially for smaller production companies. To mitigate these risks, make sure to research the payout timeline for your chosen program and factor any potential delays into your budget. Structuring the film’s financing with these contingencies in mind can help you avoid financial constraints down the line.
Navigating production tax incentives is no small feat and requires a team effort. The laws behind these programs are complex. Even minor reporting errors could disqualify your production from receiving its tax credits.
As Broussard puts it, “There's just little small print on every state. [...] and I've seen people lose millions and millions of dollars because something wasn't filed accurately with their tax. [...] It's crazy. So, it's really crucial to do things on the front end.”
A great first step is to connect with the local film office. These offices often play a key role in managing the state’s incentive program and often serve as a liaison between filmmakers and government agencies. They can also provide unique insights into tax credit requirements and permitting processes. Some even offer a database of local locations, crew, and cast for your convenience.
An insider’s perspective can help you determine the location’s feasibility while avoiding common pitfalls.
From there, it is crucial to hire production personnel with experience in that particular location. Line producers and production accountants familiar with the state’s production incentive program are particularly valuable. Their expertise with local regulations allows them to properly track qualified expenses, format budgets, and ensure financial compliance throughout production.
To maximize your budget, surround yourself with a team of experienced professionals who can guide you. By leveraging film offices and experienced local crew, you can confidently navigate the complexities of the tax credit program.
When choosing a location, producers must prioritize the story and then focus on finding the best financial fit. But what happens when state-level incentives aren’t available or the spending requirements are too high to qualify?
One approach is to explore local or secondary tax credit programs. While these incentives might not match the scale of a statewide program, they can still help offset the production budget. For example, Florida lacks a statewide incentive program, but counties like North Miami, Miami-Dade, and Broward provide lucrative tax credits that can benefit filmmakers.
However, Kansas City maintained a local film incentive program that gained attention when HBO’s The Last of Us utilized it in 2022. Broussard explains that because the show received considerable viewer and critical attention, the state brought back its own program.
Kansas City is a testament to how city-level incentives can be a game changer, even for major productions. The success of The Last of Us revived interest in Missouri’s statewide program, highlighting the ripple effect these local incentives can have. For producers, this means more funding and more opportunities to bring projects to life.
If you are a producer looking to maximize your budget, our expert panel highlighted two states to watch in 2025.
Thanks to its fully refundable tax credit program, Kentucky has recently emerged as a hotspot for filmmakers. Notably, the program allows non-resident crew to count toward the overall qualifying spend, allowing productions to benefit even when hiring out-of-state talent.
New Jersey is making waves with its Film Production Partner Program, which incentivizes long-term investments such as building production facilities or committing to a multi-year slate. The newly revamped program has already attracted the likes of Lionsgate and Netflix. With an already lucrative tax credit program, New Jersey is poised to be a prime location for years to come.
The choice of location can make or break a production, not only creatively but also financially. Producers can stretch their budgets and comfortably bring their vision to life by understanding the intricacies of production tax credits. For a more in-depth look at this topic, check out Wrapbook’s event at AFM 2024.
Gearing up for your next project? Visit our Production Incentive Center page to explore and compare film tax credit programs across the United States. When you’re ready, you can also connect with Wrapbook’s Ryan Broussard to take the first step toward finding the perfect location.
