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Welcome to the Bay State where historic charm meets cutting-edge film production. Massachusetts is known for not only its captivating scenery and rich cultural heritage but also its attractive Massachusetts film tax incentive program.
In this comprehensive guide, we will help you navigate the Massachusetts film tax credit program by explaining what Mass film tax credits are, what production expenses are eligible, and how to apply so you can maximize the budget on your next production.
Before diving into the specifics of the Massachusetts film tax credit, we invite you to explore the wealth of film tax incentive resources on Wrapbook’s Production Incentive Center.
This tool offers detailed insights into film tax incentives across the U.S., helping filmmakers make informed decisions about where to locate their next project.
From the State Incentive Map to the Incentive Comparison Tool, Wrapbook simplifies the process of understanding and comparing film tax incentives. On Wrapbook’s Production Incentive Center, you can learn more about film tax incentives offered across the country.
In this guide, however, we will focus on the film tax credit program offered by Massachusetts.
Massachusetts, one of the oldest states in the country, offers a unique blend of picturesque New England landscapes, historical landmarks, and a thriving urban environment.
In recent years, productions like Black Panther: Wakanda Forever, The Holdovers, Maestro, and Challengers have all taken advantage of the Commonwealth’s versatile scenery and lucrative film tax credits.
Whether you’re filming in the bustling streets of Boston or the serene Berkshires, the Mass film tax credit provides substantial financial benefits. The state’s commitment to the film industry is evident in its robust infrastructure, experienced local crews, and a supportive production community.
The Massachusetts film tax credit program was established in 2006 to foster economic growth and support the state's burgeoning film industry. Recognizing the impact of film production on local economies, Massachusetts introduced these incentives to attract more productions, create jobs, and boost tourism.
Over the years, the program has evolved to remain competitive, making Massachusetts a top choice for filmmakers.
The Massachusetts film tax credit is a 25% partially refundable tax credit. Additionally, there’s a sales tax exemption for production expenses.
Partially refundable tax credits, as opposed to fully refundable tax credits, mean productions will only get back a portion of their tax credit equal to their in-state tax liability.
In other words, if a production does not use the full value of their Massachusetts film tax credit, the commonwealth of Massachusetts can buy back motion picture investor tax credits for 90% of the credit’s value. With fully refundable tax credits, on the other hand, states commit to reimbursing production companies for the full amount of their tax credit.
Further, Massachusetts film tax credits are fairly unique. While productions can opt for a 90% partial tax refund, alternatively productions can choose to transfer their credits on the open market, meaning they can be sold to another company that has tax liability in the state for a percentage of their value.
Most productions opt to transfer their Massachusetts film tax credits on the open market because they usually receive more than 90 cents on the dollar back for the credits.
Massachusetts film tax credits come with a $50,000 minimum spend requirement, meaning that in order to receive the 25% payroll credit (that is the the payroll credit portion of the program), a project must spend $50,000 in state during a consecutive 12-month period.
In order to receive the 25% production credit and/or a sales tax exemption, a production must also spend more than 75% of its total budget or film at least 75% of its principal photography days in Massachusetts.
Importantly, there are no project caps or annual caps on Mass film tax credits, making the Massachusetts film tax incentive one of the most attractive in the country.
To qualify for Massachusetts film tax incentives, production companies must engage in film, television, or digital media production within the state.
Eligible projects include:
There is a minimum spend requirement of $50,000 on qualified expenses, but there are no residency requirements, meaning both in-state and out-of-state workers can benefit.
Production expenses like equipment rentals, location fees, props, and wardrobe all secured through Bay State merchants qualify for the Massachusetts film tax credit along with payroll for cast and crew.
Thankfully, the Massachusetts Film Office keeps things fairly simple. All payroll, above-the-line and below-the-line for Massachusetts residents and non-residents alike and all production spend is eligible for a 25% partially refundable film tax credit.
Productions must meet several criteria to qualify for the Mass film tax credit. These include the minimum spend requirement of $50,000 on qualified expenses, adherence to state laws regarding independent contractors, and accurate documentation of all expenditures.
Additionally, compensation to persons earning $1,000,000 or more is not eligible for the payroll expense credit. However, the earnings can be submitted for the production expense tax credit. This means, in practice, there is virtually no compensation cap.
Credits have a carry-forward of five years, meaning a production company can use or transfer the tax credits within five years of being awarded the credits.
A Loan-Out Affidavit/Allocation Form must be completed for each artist’s loan-out company.
Multiple episodes of a television series or multiple commercials for the same client may also be aggregated to qualify for the tax credit. The 12-month qualifying period must be the same for sales tax exemption and tax credits, but the qualifying period can cross taxable years.
Finally, productions must provide a detailed budget and maintain thorough records to ensure compliance with the program’s guidelines.
To apply for the Massachusetts film tax credits, productions must submit a formal application to the Massachusetts Film Office. This includes completing a notification of intent to film form, providing a detailed budget, and ensuring all qualifying expenses are documented.
Companies not domiciled in Massachusetts—whether corporations, LLCs, or loan-outs—must register with the Massachusetts Secretary of State's Office prior to the start of production.
Prior to making purchases in Massachusetts, companies must apply for the sales tax exemption.
In addition to filing the affidavit/allocation form for all loan-outs, production companies must verify that they've paid unemployment taxes and that the loan-outs have paid the maximum gross income tax withholding. Production payroll companies like Wrapbook can help you set up these tax withholdings.
Furthermore, in order to facilitate the tax withholding process, production companies must establish a Massachusetts Motion Picture Production Company withholding with the Department of Revenue.
An independent audit by a Massachusetts-licensed CPA is required to verify qualified expenditures. Upon approval, productions can claim the Massachusetts film tax incentive to offset their production costs.
The Massachusetts film tax credit is a powerful tool for filmmakers looking to maximize their budgets while enjoying the state’s diverse locations and supportive production environment. By understanding and leveraging these incentives, productions can significantly reduce costs and enhance their creative potential.
For more detailed information and to compare incentives across different states, visit Wrapbook’s Production Incentive Center. Start planning your next production in Massachusetts today!
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.
