How To Tag Your Budget for the California Film Tax Incentive in Showbiz Budgeting

California Film Commission Logo and Title Screen for Tagging your Budget for the CA Film Tax Incentive

The California Film Commission demonstrates tagging your Showbiz budget for the CA film incentive.

As our webinar on the California film tax incentive program 3.0 approaches, let’s take a moment to review just how to tag your budget to take full advantage of the California production incentive.

While there are some great new features to the incentive program for California filmmakers in 2020, this instructional video from the California Film Commission remains an excellent starting place. To get your film budget in shape for taking maximum advantage of the California incentives, watch the video below:

Now let’s break down some of the finer points of tax incentive budget tagging from the California Film Commission here.

What subgroups do I need in my budget for the California film tax credit?

The CFC makes great use of subgroups in Showbiz Budgeting for properly tagging your California film incentive spend. Here are the four film budget subgroups to use for tracking the California incentive:

  • Qualified Wages – the film commission suggests the subgroup QW
  • Qualified Expenditures (Non-Wages) – here the suggested subgroup is QE
  • Visual Effects – subgroup VU
  • Non-Qualified Expenditures – subgroup NQ

Is there a suggested chart of accounts for the California film tax incentive 3.0?

The subgroups above will make more sense in context if you review the downloadable chart of accounts for the California film tax credit program 3.0 from the CFC’s website. You’ll find some additional categories for your project’s budget there, including XX for production expenditures outside the state of California.

After setting up subgroups, CFC demo video goes on to demonstrate how to do the actual tagging of your film budget for the California tax incentive. This can be done either line-by-line or by highlighting several budget line items at once and applying a subgroup in bulk.

Per the CFC, this includes tagging Visual Effects budget line items as VU in addition to QW or QE, in order to calculate your jobs ratio bonus points for the film tax incentive in California.

Speak to an entertainment payroll expert today to discuss budget tagging for the CA film tax incentive in more detail.

Production Incentives Roundup: Where We’ve Been, Where We’re Going in 2020

With folks in Santa Monica from around the world for the kickoff of the 2019 American Film Market and Conferences, where Media Services is the Presenting Sponsor, we thought it’d be a great time to round up some upcoming production incentives offerings from around the United States, particularly California.

California, Here We Come (for Incentives Program 3.0)

California is about to have a slew of new changes to its production incentive offerings, as Program 3.0 launches in July 2020. CA will get $330 million to go into their incentives pot. This time there will be even more allocated for independent productions, and independent projects with budgets under $10 million will have their own basket of credits to pull from. This is a major development, as the current program has large and small independents competing for the same film incentive funds, sometimes to the detriment of the smaller ones.

The Golden State will also roll out a new career-based training program as well as having a new requirements showing efforts to hire more women and minorities on productions. Production must also sign a pledge condemning any sexual harassment on the job.

The state will additionally have a brand-new incentives bonus for areas outside Los Angeles. This has become a common trend we are seeing in more and more states. It helps spread production through a state and create good faith for legislators whose districts lie outside a production area. Look for California to have an increase in independent production next year, due to these filming incentives enhancements.

The current 2.0 production incentives program is seeing its window close on applications for relocating or reoccurring TV series, as November 4-8 is the final time frame. Features will have one last chance to apply to the current program: March 9-13, 2020.

New York Production Incentive: Start Spreading the News (to Web Commercials)

New York recently had some welcome news for branded content specialists as in 2020, they will allow for online commercials to qualify for the New York Commercial production incentive. This forward-thinking expansion will broaden the New York incentive outside the traditional broadcast commercials they currently cover. Look for more info and rules about this evolution to come in January.
New York also made a slight change for tax credit programs which affects the overall credit allocation. Any New York credits dispersed in 2020 will have a .025% reduction applied to them that will in turn cover diversity job training in the state.

Montana: Incentives Are Back in Big Sky Country

Montana’s production incentive came roaring back earlier this year. The state resurrected a transferrable film tax credit that gives clients upwards of 25% on labor in the state, as well as 20% on qualified Montana production spend. A trifecta of bonuses can bring that 20% film credit up to 30% and even higher. They have a low minimum spend and $5 million in the incentives tank, ready to go for productions in the area.

Mississippi Re-Incentivizes Non-Resident Labor for Productions

Mississippi had become one of the forgotten states for production in the last two years since their production incentives program stopped qualifying non-residents working in the state. However, earlier this year, they brought that element of the incentive program back. Production is increasing in the state as a result, and hopefully some more positive changes to their legislation next year will continue that trend.

New Mexico Riding High with Latest Incentives

New Mexico was of course in the spotlight this year, and we covered it here. They have a 25% refundable rebate, a grab-bag of bonuses, a bunch of infrastructure, and their innovative new production partner program will continue to attract companies like Netflix and NBC Universal to the state. Look for New Mexico to explode in 2020.

Bumps in the Night: Colorado, Pennsylvania, Rhode Island and Hawaii Film Incentives Get Fund Increases

Colorado’s production incentive recently received a much-needed bump in its film funding, adding $1.25 million to the pot. So they have a $2 million dollar funding cap right now on a very good rebate program. Applicants can still get 20% on all labor and spending incurred in the state. They hope the bump will bring some new shows to the area and give rise to an even larger increase in funding next year.

In addition to the surprise increase to Colorado and its funding, Pennsylvania received $5 million increase to their already impressive $65 million funding pool. Hawaii managed a massive 43% increase to their $35 million cap, ending at $50 million and with hopes for more next year. Rhode Island also received a $5 million bump to their $15 million pot.
Illinois has extended their program to 2026, Arkansas extends theirs to 2029, and Ohio continues to fund its program.

Tried and True Incentives Giants

Throughout 2019 incentive productions have continued to succeed. Georgia remains a strong filming state, Louisiana has really picked up steam again, and states like Alabama, Ohio, South Carolina and New Jersey are getting some great productions.

Making Their Way Back

North Carolina and Florida are working hard currently to bring work back to their filming communities with help from their production incentives. We look forward to tracking their progress in 2020 and beyond.

Former Ambassador Colleen Bell Named New Head of California Film Commission

Production crew member discussing healthcare with doctor

Colleen Bell, a former daytime television producer and President Barack Obama’s pick for U.S. ambassador to Hungary, will take the reins of the country’s largest film commission as its new executive director. The appointment by California Governor Gavin Newsom comes days after longtime director Amy Lemisch stepped down from the post. Lemisch is credited with having replaced California’s unpopular lottery system with a robust new film tax credit in 2014, which has attracted new feature production as well as drawing runaway television series back to the state.

California’s film tax incentive is a hot topic in recent weeks, as controversial new abortion bills in incentives-rich states such as Georgia and Alabama have led some in the industry to call for production boycotts there. There is even talk of a new proposed provision in the California incentive that would reward productions relocating from those states in protest.

No official start date has been named for Bell, whose appointment was reported by The Hollywood Reporter.

L.A. Sees More Production Days as Incentive Program Hits Full Stride

Hollywood production is booming thanks to the newly overhauled California tax credit incentive, according to recent numbers. Fueled partly by a number of high-profile television series relocating to Los Angeles from other states, the so-called “2.0” version of the incentive program has generated a 24% uptick in local production days for TV dramas in the third quarter of 2015, enough to keep local industry vendors busy.

Read more about it in the Los Angeles Times. See all incentive programs across the country in our interactive incentives map.

CA Rolls Out First “New Program” Tax Credit Lottery in May

On April 1, the California Film Commission will accept applications for its last-ever tax credit lottery under what is now being referred to the “old program.” The office made an announcement today that a large number of television series productions currently receiving credits will return for an additional season and remain in the program for its final year – leaving only a handful of credits available to new productions and eliminating studio projects from eligibility for the final lottery.

Ten million dollars will still be available for independent productions via the lottery, with old program rules still in effect.

First Application Period for New Lottery May 11-17

The new program will have two application periods for fiscal year 2015-16 (July 1, 2015 – June 30, 2016). The first will be May 11-17, for non-independent television projects only. Credit allocations will be available July 1 at the earliest. Other details from the film commission:

  • $55.2 million in tax credits available for New TV series, TV pilots, MOWs, Mini-series for any distribution transmission
  • $27.6 million in credits available for Relocating TV Series (defined as a series with $1 M minimum production budget, previous season shot outside CA, and must attest that the tax credit is the primary reason for move to the state)
  • Projects will be selected via a new competitive ranking system based on jobs and other criteria

A second application period, to be announced this summer, will cover other types of production. Read more about the old and new programs at the California Film Commission website here. Learn about production incentives nationwide here.

Record 322 Applicants for CA Tax Credit; Nearly Doubles Last Year’s Number

California state map cartoonA record 322 applicants submitted projects for the California Film & Television Tax Credit Program last Friday, hoping to be chosen at random for the 20-25% nonrefundable credit for qualifying features and TV series. Because the $100 million annual allotment to the credit is typically not enough to cover all the productions that apply, a lottery is used to select the applicants that actually receive the credit. This year the lottery process, which is completed in one day, drew nearly twice as many submissions as 2011.

Once an application is submitted and vetted by the California Film Commission, it is placed in a queue. During the lottery, queue numbers are chosen at random, and those projects are given the opportunity for a tax credit allocation. Projects that do not get selected in the lottery are placed on a waiting list and offered allocations as they become available due to withdrawals, disqualifications, cancellations of projects, etc. This year, 28 projects were selected out of the 322, though many more from the waiting list could end up receiving credits – for example, last year there were 27 projects selected, but 74 ended up benefiting in the end.

While the film & TV tax credit program is set to expire in a year, a bill has been proposed in the California Assembly to extend the program in the state through 2018. The original tax credit was created in 2009. While the $100 million annual budget and 20-25% credit are considered modest in film incentive terms – consider New York’s 30% state film tax credit, funded by over $400 million per year – the California credit is viewed in some studies as a pivotal factor in a windfall in film production and thousands of production jobs created in the state since the program was initiated.

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