Digital Media & Motion Picture Tax Credit

Digital Media & Motion Picture Tax Credit Overview With its diverse array of locations — from historic to modern settings, coast to country, small towns to urban centers — Connecticut is an ideal site for film, TV and commercial productions. What makes it even more attractive is that the Connecticut General Assembly established tax credits for the production of digital media and motion pictures in Connecticut. More information about this tax credit can be found on the website of the Department of Revenue Services . Credit Details To qualify for this tax credit, the minimum expenditure is $100,000. The actual credit amount depends on the production's total expenses or costs as follows: Production Expenses or Costs Potential Tax Credit $100,000–$500,000 10% $500,000–$1,000,000 15% $1,000,000 or more 30% Eligibility Any “eligible production company” may apply. An eligible production company is a liability company or other business entity that produces a qualified production in Connecticut and is registered with the Secretary of State to do business in Connecticut. A company may be eligible for this tax credit if it: conducts at least 50% of principal photography days within the state; expends at least 50% of postproduction costs within the state; or expends $1 million or more in postproduction costs in this state. Qualified Productions. A “qualified production” means the process of producing any type of entertainment content. Entertainment content is defined to include motion series, music games and other productions listed in the statute, which are created primarily for distribution or exhibition to the general public. Eligible Production Expenses. Production expenses or costs used in calculating the tax credits include expenditures clearly and demonstrably incurred in Connecticut in the preproduction, production or postproduction costs of a qualified production, including expenditures in the form of either compensation or purchases including production work, production equipment, production software, postproduction work, postproduction equipment, set design, set and other costs or services directly incurred in the state in connection with a qualified production. These include: In-State Expenditures. In addition to minimum expenditure requirements, a production company is required to conduct at least 50% of its principal photography days in the state, or spend at least 50% of its postproduction budget in state, or spend at least $1 million on postproduction in state to be eligible. Out-of-State Expenditures. No out-of-state expenses are eligible. Star Salaries. Compensation for all-star talent featured in a film or digital media production is limited to $20 million in the aggregate and requires that the compensation be subject to Connecticut personal income tax. Audit Costs. Costs related to the required independent audit of project costs and expenses are excluded. How to Apply To obtain tax credits, eligible production companies must complete a two-step process. An eligible production company applies for an eligibility certificate. This application must be made no later than ninety (90) days after the first qualified production expense or cost is incurred in Connecticut on a qualified production. The eligibility certificate certifies that the production company is eligible to earn the tax credits.