Maximizing Your Production Budget: A Guide to Film Tax Credits in NYC

Shooting a film project in NYC is exciting. From “Taxi Driver” to “When Harry Met Sally,” many famous movies were shot on location in the Big Apple. Your film can join titans like these, but first, you have to deal with the reality of film production costs. Actors and equipment alone can be expensive, to say nothing of cordoning off a street for an afternoon.

Luckily, New York actually wants filmmakers like you to shoot on location! The Empire State Film Production Credit is in place for exactly that purpose. It lets you write off some of the costs of film production when tax season rolls around. Think of it as New York’s way of saying, “Hey, come shoot your project here!”

First, though, you need to know how to apply for this credit and get the most out of it.

What Are Film Tax Credits and Why Do They Matter?

Let’s define our terms first.

A film tax credit is a refundable credit issued to production companies by the state or federal government. When the production company files taxes, it can use the credit to reduce the amount of income tax it owes.

This credit can lead to significant film production cost savings. Clever production companies will use this extra wiggle room to invest in postproduction, more experienced staff, or extra shooting days.

For the state, the tax credit attracts filmmakers to NYC and other communities. Production companies bring jobs with them, boosting local economies and fostering a culture of art and collaboration.

The most important tax incentive for shooting films in NYC is the Empire State Film Production Credit. It is also known as the New York State (NYS) Film Production Tax Credit Program.

Who Qualifies for the Empire State Film Production Credit?

The Empire State Film Production Credit applies to productions of all sizes. Big-budget blockbusters and small indie projects can both write off a portion of their expenses. All they have to do is spend a significant portion of the production budget in New York.

This tax credit has two different eligibility levels, each with different guidelines. The first applies to productions that cost less than $15 million and provides tax benefits for independent filmmakers and companies that are primarily privately owned. The second applies to productions that cost more than $15 million and typically applies to larger studio productions owned by publicly traded companies.

Production Types That Qualify

The following production types are eligible for the Empire State Film Production Credit:

• Feature films and TV movies
• TV series and miniseries
• TV pilots
• TV presentations

Documentaries, news reports, sporting events, commercials, and other productions that don’t fit these categories are not eligible.

Minimum Spend and Location Requirements

To qualify for either eligibility level, your production has to meet certain criteria.

The first level only applies when 75% of the production costs are in New York. Postproduction costs are not included in this figure. The production must also involve a set and have at least a day of shoots in a qualified production facility (QPF) in New York.

The second level also follows the 75% rule for production costs. These productions have to shoot on a set as well, but they have to shoot in a QPF on at least 10% of their shooting days.

What Does the Empire State Film Production Credit Cover?

Film commission rebates for productions can result in enormous savings. To get those savings, though, you need to know which production costs are eligible. You also need to keep track of those costs to simplify the auditing process.

Percentage of Costs Covered

The Empire State Film Production Credit can cover 30% of qualifying production costs.

Your production may also qualify for certain uplifts. For example, if a company takes on multiple projects in New York, it may be eligible for a 5% to 10% bump. You might even be able to write off 10% of qualifying labor costs if you film in certain upstate counties.

Eligible Expenses to Track

To get your costs covered, you need to know which costs qualify. Your production costs can be divided into two categories — above-the-line costs and below-the-line costs.

Above-the-line costs include story rights, financing fees, and the pay that directors, screenwriters, and other high-level personnel receive. Most of these costs do not qualify for the tax credit. Some capped salaries qualify, though, so long as they don’t exceed 40% of other qualifying costs.

Below-the-line costs include set construction, location fees, wardrobe, and on-set equipment. Costs in this category do qualify for the tax credit. For example, if your production needed to rent a tent as set dressing for a scene, part of the cost could be written off. You may even be able to cover part of the labor costs for NY-based extras with the credit.

Bookkeeping along these lines will make applying for the credit easier. So, be sure to organize your production costs into these categories and keep receipts on hand.

Project and Credit Limits

There is no limit on the amount of credit an individual production can receive, so long as it qualifies. The only real limitation is that New York puts $700 million into the Empire State Film Production Credit each year. This cap is rarely reached, though, unless the state receives a sudden influx of applications.

How to Apply for Film Tax Credits

The application process for film production tax credits varies based on its scope and who is offering the credit. Most processes are handled online, though, and have certain documentation requirements.

Here’s what each step looks like if you’re applying for the Empire State Film Production Credit.

1. Initial Application With Empire State Development

Empire State Development is a branch of New York State’s government dedicated to growing the state’s economy. They provide the Empire State Film Production Credit.

You must submit your initial application for the credit to Empire State Development before principal photography starts. These applications primarily consist of a project summary form that outlines your budgeting, shooting schedule, personnel, and other details. Your numbers don’t have to be fully accurate. The application gets your production in the system and lets you confirm that it is eligible.

2. Gathering Required Documentation

After the initial application is approved, you must start documenting the production. Collect employment reports, daily production reports, vendor lists, and receipts of other expenses during the project. Each document will be audited later, so be thorough. Digital tools like Wrapbook can help streamline this process.

3. The Review Process and Timeline

When postproduction wraps up, it’s time to submit your final application for review. This application will include all the documentation you collected during production.

Empire State Development then reviews that application and either approves or denies it. The review timeline varies, but it can take over a year for your production company to receive the tax credit certificate.

Tips for Maximizing Tax Credits

Getting the most out of tax incentives for filmmakers starts before you receive them. Here’s how you can prepare for yours:

1. Create a tax credit binder: Store qualifying receipts, contracts, and payroll records in a single location to make it easy to sort through relevant expenses and figure out how to apply the credit.
2. Hire a production accountant early: An experienced accountant can help you identify eligible costs and avoid accounting errors when dealing with film tax credits.
3. Spend locally: Working with NY-based businesses, crew members, and shooting locations can strengthen your application. It can also save you more money in the long run.

Partner With Cabaret Tent Rental for NY-Based Sets and Wrap Parties

If you’re looking for high-quality tent rentals for your production, Cabaret Tent Rental has got your back. We’ve been serving events, parties, and more across the New York tristate area since 1982. Our tents can protect your equipment during shoots or serve as the perfect backdrop for a climactic wedding scene. You can even cover the cost with the Empire State Film Production Credit!

To learn more about our services, fill out our contact form or reach out at (929) 416-0511.