Unlock Savings with Illinois Film Tax Credits

Why Illinois?

Home to rich farmland, shady suburbs, and the third largest metropolis in the country, Illinois has everything a production could need.

Whether you are filming on the modern and brawny streets of Chicago, or one of Illinois’s many charming small towns like Woodstock, you’ll have support from the state’s talented and experienced crew base, the Illinois Film Office, and of course, attractive Illinois film tax credits.

It’s no wonder why there have been so many movies filmed in Chicago and beyond, from modern classics like The Blues Brothers, Ferris Bueller’s Day Off, and Home Alone to recent favorites such as Christopher Nolan’s Batman trilogy and David Fincher’s The Killer.

Over the last decade, as Illinois film tax incentives have expanded in lockstep with streaming, many television series have also taken advantage of all Illinois has to offer including FX’s wildly popular The Bear, Fargo, and NBC staples Chicago Fire, Chicago Med, and Chicago P.D.

The Illinois film tax credit program enhances the state’s appeal to productions like these and many more by reducing financial barriers and enabling more projects to utilize the state’s resources. Let’s take a look at how the Illinois Film Office tax credit program has grown.

How Illinois film tax credits came to be

The Illinois film tax credit was first established in 2004 to revitalize and sustain the state’s film and television industry.

Recognizing the economic benefits of production—job creation, tourism, and increased local spending—Illinois built its film incentive program to compete with those in other states such as California, Georgia, Louisiana, and New York.

Over time, the program has evolved, with expanded funding to meet the needs of production. Today it remains one of the most competitive film tax incentives in the country and stands as a cornerstone of the state’s filmmaking infrastructure, offering robust support to both small and large-scale projects.

What are Illinois film incentives?

Illinois offers a fully transferable tax credit of 30% to 45% on qualified production expenditures incurred in the state.

As a transferable film tax credit, the Illinois film tax incentive differs from refundable film tax credits and film rebates offered by some other states.

With transferable tax credits, the state does not issue your production a refund check but instead offsets your in-state tax liabilities.

However, many productions receiving these tax credits don’t have businesses formed in the state, and therefore do not have state tax liability to offset. That’s why the Illinois film tax credit is transferable; you can sell the credit to another company, which in turn can use the credit to offset their in-state tax liability.

In order to qualify for the Illinois film tax credit, productions must meet certain minimum spending thresholds outlined by the Illinois Film Office and the Illinois Department of Commerce and Economic Opportunity.

Projects that have a final runtime longer than 30 minutes must spend at least $100,000 in the state to qualify for an Illinois film tax credit. Projects that are 30 minutes or less must spend at least $50,000—one of the lowest minimum spend requirements in the country.

The Illinois film tax incentive program does not have a project cap or an annual funding cap. This means there is no upper limit to the amount a single project can potentially see reimbursed via tax credits, and no upper limit to the amount of money the program can dish out in a single tax year. 

With no project cap and no annual cap, the Illinois film tax credit is highly attractive to productions looking to maximize film tax credits. Very few other states—Georgia among them—have similarly uncapped incentive programs.

In order to take advantage of the savings, though, your production must be one of a handful of eligible project types.

Who qualifies for Illinois film tax credits?

Projects eligible for Illinois film tax credits include:

• Feature films
• Television series (scripted and unscripted)
• Commercials
• Documentaries
• Music videos
• Animation
• Interactive content

As of 2024, national talk shows, contest-based shows, and game shows can also qualify for Illinois film tax credits, a huge boon for unscripted production in Illinois. 

What expenditures qualify for Illinois film incentives?

If your project is eligible for an Illinois film tax credit, congrats! You’re on your way toward significant production savings in the Prairie State. 

In order to maximize your return, it’s important to understand which production expenses qualify for the Illinois film tax credit. Fortunately, most production expenses incurred in Illinois during your shoot can qualify. That means you can save money on everything from production payroll to location rentals to craft services.

To better understand how different production expenses factor into your overall Illinois film tax incentive, it’s helpful to break them down into two categories:

Cast and crew payroll

Above-the-line and below-the-line residents are eligible for a base tax credit of 30% on the first $500,000 paid to each worker in Illinois under the Illinois film tax credit program.

Furthermore, in order to incentivize local hires and support Illinois’s crew base, the program limits the number of nonresidents eligible for the payroll credit. 

No more than nine nonresident cast and crew can be eligible for a 30% payroll tax credit, also capped at $500,000 per person. Eligible nonresident positions are limited to:

• Director
• Writer
• Director of photography
• Production designer
• Costume designer
• Production accountant
• VFX supervisor
• Editor
• Composer
• Actors

Additionally, for qualified productions spending $25 million or less, no more than two nonresident actors qualify for tax credits. For qualified productions spending more than $25 million, no more than four nonresident actors qualify. 

Finally, for a television series, qualifying nonresident wages are limited to the entire season and not calculated on a per episode basis.

Payroll is often a production’s largest expense, and so it’s very important to keep these nonresident compensation rules in mind and budget accordingly when planning your Illinois shoot.

Production expenses

Along with the 30% payroll tax credit, most physical production expenses incurred during production in the state and purchased from Illinois vendors are eligible for a 30% Illinois film tax credit. 

This means everything from set construction materials to prop rentals to wardrobe purchases can help you earn back your production budget in Illinois.

For a complete list of qualified production expenses, check out the Illinois film tax credit program’s comprehensive list.

Bonuses

Earlier, we said that the Illinois film tax credit ranges from 30% to 45%. With both the tax credit for payroll and production expenses set at 30%, you may be wondering how to boost your project’s tax credit up to 45%.

The answer is by qualifying for an Illinois film tax incentive bonus. 

In Illinois, productions receive an additional 15% tax credit on salaries paid to individuals (earning at least $1,000 in total wages) who live in economically disadvantaged areas. For the purpose of this bonus, economically disadvantaged areas are defined as those in which the unemployment rate is at least 150% of Illinois’s annual average.

Other film tax incentive programs across the country provide bonuses to productions that film in economically disadvantaged areas of the state. To avoid confusion, it’s worth emphasizing here that the Illinois film tax credit bonus is a payroll bonus; it applies to compensation for cast and crew hires living in these areas and is independent of filming location.

What are the requirements for Illinois film tax credits?

In addition to meeting the minimum spend requirements outlined above, productions must satisfy a few other requirements in order to qualify for an Illinois film tax credit.

Chief among them is Illinois’s diversity requirement. Production companies must promote diversity by making good-faith efforts to hire ethnic minority persons and women. To help achieve this, projects must submit a diversity plan when applying for Illinois film tax credits. 

In the diversity plan, production companies must outline the proactive steps that they will take when hiring a crew that represents the state’s diversity.

After completing production in Illinois, production companies must work with an independent, licensed certified public accountant to validate and calculate their local production spend. The CPA must certify qualifying Illinois expenses for the tax credit claim and must send all documentation to the Illinois Film Office.

Most productions also must provide screen credit to the Illinois Film Office in their project’s end credit crawl by including an official Illinois Film Office logo as provided by the Illinois Film Office. Commercial projects are exempt from this requirement.

Finally, projects must provide certain marketing materials to the Illinois Film Office after completing production, including production stills, a DVD of the completed project (yes, a DVD), and project posters. A complete list of materials can be found on the Illinois film tax credit application.

By adhering to these requirements, projects can prevent unnecessary delays and hurdles when applying for Illinois film tax credits.

How to apply for Illinois film tax incentives

So how do you apply for Illinois film tax credits? Luckily the process is fairly simple and straightforward.

First, projects must submit an initial application to the Illinois Film Office. Television, film, and streaming projects must submit an application at least five days prior to the start of principal photography. Commercials must apply at least 24 hours before filming begins in Illinois.

The application should include a complete script, detailed budget, and production schedule along with:

• Proof of ownership or rights to the project’s intellectual property
• A diversity plan outlining specific goals for hiring minorities and women
• A competitive need statement demonstrating that if not for the credit, the applicant’s production would not occur in Illinois.

After the Illinois Film Office approves a project’s initial application, the office will issue an Accredited Production Certificate to the applicant. This certificate does not automatically entitle the applicant to a film tax credit, but rather certifies that the production meets all eligibility criteria of the Illinois Film Office tax credit program.Once production in Illinois is complete, the production company claiming the Illinois film tax credit must then work with an independent, licensed CPA who will certify all qualifying Illinois expenses for the tax credit claim.

Upon receipt of the claimed credits from the CPA, the Illinois Film Office then reviews the project’s qualified expenses and diversity efforts. If everything is approved, the film office issues a Tax Credit Certificate, and just like that, you’ve secured your Illinois film tax credit.

As we mentioned earlier, Illinois film tax credits are transferable. If your production company does not have sufficient Illinois state tax liability to offset, you can transfer the credit within one year of its issuance.

Illinois film tax credits can be divided between up to 10 transferees but they can not be re-transferred. Before transferring your tax credit, you must submit a request to transfer via a Transfer Request Form. The request must include:

• Original taxpayer’s name
• Date the original tax credit certificate was issued
• The tax credit amount earned
• Amount of the tax credit to be transferred
• Federal Taxpayer ID # of transferee with attached W-9 from the buyer

Illinois film tax credits also have a carry forward of five years, meaning they can be used up to five years after their issuance.

Wrapping up

With substantial financial incentives for productions of all sizes, the Illinois film tax credit not only attracts filmmakers to the Land of Lincoln but also supports local communities and economies.

By understanding and leveraging the Illinois film tax incentive, you can ensure your next project thrives creatively and financially. 

For more information on Illinois film tax incentives, or to compare incentives across different states, visit Wrapbook’s Production Incentive Center—your ultimate partner in navigating America’s film incentive landscape.