Pennsylvania Expands Film Production Tax Credit in 2022-2023 Budget

Signed by Gov. Tom Wolf (D) on July 8, Pennsylvania legislators settled on a budget plan that will lower the state’s corporate net income tax rate from 9.99% to 4.99% by 2031. The new $45.2 billion state budget also increases the cap on the state’s film production tax credit program from $70 million to $100 million. The new $100 million tax credit cap “shall remain at the amount allocated for fiscal years beginning after June 30, 2022, and ending before July 1, 2025.”

Pennsylvania offers a 25% tax credit to productions that spend at least 60% of their total budget in the Commonwealth. Projects eligible for film tax credits under the program are: the production of a feature film, a television film, a television talk show or game show series, a television commercial, a television pilot or each episode of a television series intended as programming for a national audience. 

Films that qualify are eligible for a tax credit equal to 25% of the production’s total Qualified Pennsylvania Production Expenses. An additional 5% tax credit, for a total credit of 30%, is available for productions that meet the minimum state filming requirements at a qualified production facility. Films with eligible post-production expenses incurred at a qualified post-production Facility, either as part of a Film’s total production activities or as a stand-alone post-production project, are eligible for a 30% tax credit of the film’s qualified post-production expenses. Agencies doing film production work in Pennsylvania should explore their eligibility for the film tax credit program here..

In 2022, at least seven states have enacted measures to implement or expand film tax incentives. Indiana and Arizona created the states’ first film tax credit programs, which both apply to television commercial production. Illinois expanded its existing credit program by increasing the cap on qualified resident and non-resident wages to $500,000, up from $100,000 for resident wages only. The state of Washington increased the amount of film tax credits that could be awarded annually from $3.5 million to $15 million. 

After a failed attempt to revive film incentives in 2017, West Virginia reinstated an incentive program with no cap on the amount of credits that can be awarded annually. Legislation approved in New Jersey increased the annual limitation on digital media content production tax credits to $30 million from $10 million and increased the percentage of qualified expenses that can be claimed (not applicable to television commercial production). In Georgia, a bill to limit tax film credits at $900 million annually was introduced to the legislature but failed to pass earlier this year. Legislators cited concerns of losing film industry business over changes to the current incentive programs.

 A state by state guide to film production tax credits can be found here.

For questions or more information about state film production tax credits, please contact Alison Pepper.