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Kentucky's rich cultural heritage, diverse landscapes, and supportive filmmaking community make it an ideal location for filmmakers. But what truly sets Kentucky apart is its generous film tax credits, designed to attract and retain film productions within the state.
Understanding Kentucky film tax incentives is paramount for producers looking to optimize their budgets and make the most of their filmmaking endeavors. In this comprehensive guide, we'll delve into the world of Kentucky film tax credits, covering everything from eligibility criteria to application procedures.
Before we dive into the intricacies of Kentucky film tax credits, let's take a moment to explore Wrapbook's Production Incentive Center. This invaluable resource provides filmmakers with easy access to comprehensive information about film tax incentives across various states, including Kentucky.
With Wrapbook, researching and comparing incentives has never been easier. Wrapbook’s Production Incentive Center empowers filmmakers to make informed decisions about their production locations.
Kentucky, the aptly named Bluegrass State, is home to rolling hills, a rich history, and a wealth of extraordinary architecture. Unlike some states to the south and west, Kentucky boasts four distinct seasons. It truly is a filmmaker's canvas.
Beyond its idyllic landscapes and cultural richness, Kentucky offers robust film incentives that have positioned it as a top choice for productions.
Kentucky film tax incentives began in 2009, during a pivotal era for the film industry.
After nearby Georgia introduced its film tax credit in 2008, the Peach State saw an influx of production—and revenue—from big-budget Marvel movies and TV shows like AMC’s The Walking Dead.
Kentucky followed suit by introducing film tax credits of their own. These incentives were not only a means of preserving the state's vibrant filmmaking tradition but also a catalyst for economic growth and job creation.
Over the years, these incentives have evolved to remain competitive with those offered by other states, ensuring that Kentucky remains a top choice for filmmakers.
As a powerful incentive for production companies, Kentucky provides a fully refundable tax credit. This means that the state commits to reimbursing production companies for the full amount of their tax credit.
If your production qualifies for a film tax credit in Kentucky, you will get back dollar for dollar what you spend in the state, aligned with the credit percentage that you qualify for.
Productions filming in Kentucky can qualify for a 30-35% total tax credit.
Kentucky’s minimum spend requirement is project-dependent. For feature-length films, television programs, and industrial films filmed in Kentucky, Kentucky-based companies must have a minimum in-state spend of at least $125,000. Out-of-state companies must spend at least $250,000 in state.
For documentaries filmed or produced in whole or in part in the commonwealth of Kentucky, Kentucky-based companies must spend at least $10,000 in state. Out-of-state companies must spend at least $20,000.
National touring productions of a Broadway show produced in whole or in part in Kentucky, Kentucky-based companies and out-of-state companies must have a minimum spend of at least $20,000.
Kentucky’s project cap is $10,000,000, meaning $10 million is the most amount of money that can be awarded to any particular project.
Finally, the Kentucky film tax incentives program has an annual cap of $75,000,000 for the fiscal year 2024. This annual cap represents the total allocation for film tax credits within the fiscal year.
Kentucky film tax credits are available to production companies engaged in filming or post-production activities within the state. Whether you're producing a feature-length film, television program, or documentary, you may be eligible for these valuable incentives. Eligible project types include:
By meeting certain criteria and going through the application process, filmmakers can unlock the full potential of Kentucky film tax incentives.
Qualified expenditures form the backbone of Kentucky film tax credits. These expenditures encompass a wide range of production-related costs, including wages paid to cast and crew, rental fees for equipment and facilities, and goods purchased within the state.
Importantly, expenditures must be subject to taxation by the state to qualify for the film tax credit in Kentucky.
By ensuring that expenditures meet the necessary criteria, filmmakers can maximize their eligibility for Kentucky film tax incentives.
The first category of eligible production expenses encompasses wages paid to cast and crew. Kentucky film tax credits breaks these down into four subcategories, including:
Productions that are awarded Kentucky film tax credits can get a 35% credit for each above-the-line resident that the production employs. This means that the production will receive back 35% of the in-state wages they pay each above-the-line resident in the form of a tax credit after filing a Kentucky state tax return.
Qualifying payroll expenditures paid to above-the-line residents are capped at $1,000,000 per employee, meaning that only the first $1 million paid to above-the-line residents qualifies for the 35% tax credit.
Fringe benefits do not qualify for the credit, so make sure you budget correctly.
Productions will also receive a 30% tax credit for every above-the-line nonresident they employ.
Qualifying payroll expenditures paid to above-the-line non-residents are capped at $1,000,000 per employee.
Productions awarded Kentucky film tax incentives will also receive a 35% credit for each below-the-line resident the production employs on all wages paid while the resident is working in state.
Finally, productions can receive a tax credit equal to 30% of wages paid to below-the-line nonresident crew.
Cast and crew wages make up a sizable portion of most production budgets, but you’ll need more than even the best talent in the industry to really bring your production to life.
That’s why Kentucky offers a tax credit of 30% for physical production expenses. This means productions can get back 30% of every dollar spent on physical goods purchased in state from local vendors.
It’s worth noting that insurance does not count as an eligible production expense in Kentucky, and this includes production insurance. When budgeting, make sure you don’t factor insurance costs into your overall calculations of what you expect to get back.
With the abovementioned tax credits all at or around 30%, you might be wondering how your next production can receive the full 35% tax credit that Kentucky boasts as the upper limit to its film incentive? That’s where credit bonuses come in.
Productions filmed in locations designated by the Kentucky Film Office as Enhanced Incentive Counties can receive a 5% bump on expenses incurred in those counties. Eligible counties can be found here.
While Kentucky film tax credits offer significant financial benefits, they also come with certain requirements that must be met.
From deadlines for production start and wrap dates to registration and withholding obligations, filmmakers must adhere to a set of guidelines to qualify for these incentives.
Productions receiving Kentucky film tax credits must begin within six months of Kentucky Economic Development Finance Authority (KEDFA) approval and must be completed within two years of the production start date.
Loan-out corporations involved in production must register with the Commonwealth of Kentucky. Loan-outs must have a 4% withholding to qualify for the tax credit. In order to elect Kentucky payroll tax withholding, use the Kentucky withholding form.
Kentucky conducts independent audits of all productions that receive Kentucky film tax incentives to ensure compliance with the program's guidelines and regulations.
As with most state film tax credits, Kentucky requires that every production receiving film tax incentives include acknowledgment in the end screen credits that the production was produced in Kentucky.
Understanding these requirements is essential for a smooth and successful application process.
Navigating the application process for Kentucky film tax credits requires careful planning and attention to detail. From reaching out to Kentucky Economic Development Finance Authority (KEDFA) staff to submitting the necessary documentation, each step plays a crucial role in securing these valuable incentives.
Acceptance into Kentucky’s film tax credit program is issued on a case-by-case basis.
The Kentucky Film Office may require that the approved company pay an administrative fee of $500 or 0.5% of the estimated amount of the tax incentive, whichever is greater. The application fee can range from $250-$1,000 based on budget size.
Applicants must also pay legal fees ranging from $1,000-$5,000 depending on the complexity of the contract with the state. All fees must be paid at the time of filing the application.
The application is evaluated by the KEDFA, which meets on the last Thursday of each month with the exception of November and December.
Forty-five days prior to the KEDFA meeting, applicants should reach out to KEDFA staff to discuss eligibility. If the project is eligible, staff members will provide the project with an application.
The application must be submitted one month before the next KEDFA meeting. KEDFA will decide at the meeting whether to approve the project.
Once KEDFA approves, the project must have a Kentucky expense within six months of approval and must be completed within two years of approval. At least 30 days before incurring costs, the project must submit a tax incentives application and supportive documents.
By following a systematic approach and meeting all requirements, filmmakers can position themselves for success in landing Kentucky film tax incentives.
Kentucky film tax credits represent a golden opportunity for filmmakers to bring their creative visions to life while enjoying significant financial benefits. By understanding the intricacies of these incentives, filmmakers can make informed decisions about their production locations and maximize their budgetary resources.
If you’re curious how film incentives in Kentucky stack up against the rest of the country, check out our state-by-state incentive breakdown. Or better yet, head on over to Wrapbook’s new Production Incentives Center where you can have all your incentive questions answered.
With Wrapbook's Production Incentive Center as your guide, unlocking Kentucky's film tax credits has never been easier.
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.
Tom is a filmmaker, producer, and marketing specialist based in Los Angeles.
