Mass Film Tax Credit Law in a Nutshell

MASSACHUSETTS FILM TAX INCENTIVE PROGRAM SUMMARY

[In the event of a conflict, Massachusetts General Laws and Massachusetts Department of Revenue directives prevail over information presented here.]

Massachusetts has a very competitive film tax incentive program for motion pictures that are produced in Massachusetts. Film production companies may be eligible for:

1. Sales & Use Tax Exemption
2. Transferable 25% Payroll Credit
3. Transferable 25% Production Expense Credit

PRODUCTION ELIGIBLITY

Eligible Productions:
• Feature-length film, video, or digital media project (narrative or documentary).
• TV series (not to exceed 27 episodes).
• Commercial (multiple commercials for one client may be aggregated).
All must be made in MA, in whole or in part, for theatrical or television viewing or as a television pilot.

Not Eligible:
• Productions featuring news, current events, weather and financial market reports, talk show, game show, sporting events, awards show, or gala
event
• Productions whose sole purpose is fundraising
• Long-form production that primarily markets a product or service
• Production containing obscene material or performances
• Video games
• Corporate training and in-house corporate advertising

DEFINITION OF FILM PRODUCTION COMPANY
A company, including any subsidiaries engaged in the business of producing motion pictures, videos, television series, or commercials intended for theatrical release or for television viewing.

1. SALES TAX EXEMPTION

Eligible:
• Production company that spends at least $50,000 in total production costs in MA during a consecutive 12-month period
• Accredited film school students

The sales tax exemption is applied to production costs incurred in Massachusetts.

2. PAYROLL TAX CREDIT OF 25%

Eligible:
• Production company that spends at least $50,000 in production costs on a motion picture in Massachusetts during a consecutive 12-month period

The 25% credit is applied to aggregate payroll of a motion picture that is subject to MA personal income tax withholding.

NOT eligible for payroll credit:
Payments to an employee when total payments are $1m or more (“High Salary Employee”).

3. PRODUCTION EXPENSE CREDIT OF 25%

Eligible:
• Production company that spends at least $50,000 in production costs on a motion picture in Massachusetts during a consecutive 12-month period.

AND one of the two:

• Production company that spends more than 50% of a motion picture’s total production expenses in MA

OR

• Shoots more than 50% of a motion picture’s principal photography in Massachusetts.

The 25% credit is applied to:
• Payroll of “High Salary Employees” not applied in the payroll credit.
• Pre-production, production and post-production expenses incurred in the production of a motion picture in Massachusetts including set construction/operations, photography, lighting, sound, editing, wardrobe, make-up, film processing, transfer, sound mixing, special & visual effects, location fees, purchase or rental of facilities and equipment.

Expenses NOT eligible:
• Aggregate payroll expenses applied to the payroll credit
• Payroll services fees, loan fees, interest expenses, completion bond expenses, rights and script fees, insurance expenses, marketing and advertising, costs and licensing fees for stock footage and archival materials, travel to and from Massachusetts, other expenses as determined by the Department of Revenue.

OTHER KEY ELEMENTS

• Tax liability is credited to the company’s personal income or corporate excise tax liability.
• Tax credits may be transferred OR the credits may be refunded by the state for 90% of their value.
• If transferred tax credits can be carried forward 5 years.
• The law expires on 1/1/2023.

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