Nevada Enacts New Film Tax Credit, Connecticut Imposes Film Moratorium

The Bloomberg BNA Tax Management Weekly State Tax Report filters through current state developments and analyzes those critical to multistate tax planning.

Two states have recently taken divergent approaches to film tax credits - Connecticut placed a two-year moratorium on films under its tax credit program, while Nevada enacted a completely new film tax credit program. [Connecticut H.B. 6706, enacted 6/19/13; Nevada S.B. 165, enacted 6/11/13]

These different approaches toward film tax credits add fuel to the debate regarding whether film tax credits are effective in the first place.

“Film tax credits fail to live up to their promises to encourage economic growth overall and to raise tax revenue. States claim these incentives create jobs, but the jobs created are mostly temporary positions, often transplanted from other states. Furthermore, the competition among states transfers a large portion of potential gains to the movie industry, not to local businesses or state coffers,” notes Joseph Henchman, Vice President of Legal & State Projects and Operations at the Tax Foundation, in Fiscal Fact No. 272.

Others argue that film tax credits actually do meet their intended goals. Connecticut's film tax credit has “been doing well since its inception in July 2006,” says George Norfleet, Director of the Connecticut Office of Film, Television, and Digital Media. “Since that time, there has been a great deal of growth in the state regarding job creation,” he adds.

Connecticut's Moratorium

Despite job growth, Connecticut enacted a two-year moratorium on its film tax credit program due to budget shortfalls, says Norfleet. Enacted as a “cost-savings measure,” the moratorium only applies to films - all other types of productions remain eligible for the tax credit, Norfleet explains.

Connecticut offers a tax credit to eligible companies that produce qualified films or other types of television, video, or digital media entertainment content in the state. However, the legislation provides that certain motion pictures are no longer eligible for tax credits issued on or after July 1.

Specifically, H.B. 6706 amends the definition of “qualified production,” so that it does not include motion pictures, for the 2014 and 2015 fiscal years, that have not been designated as a state-certified qualified production prior to July 1, 2013.

For the 2015 fiscal year, motion pictures are eligible for the tax credit if they conduct at least 25 percent of their principal shooting days in Connecticut at a facility that receives at least $25 million in private investment and opens for business on or after July 1, 2013.

“Connecticut certainly wants to maintain its own incentive, so that is why the state took a limited approach to the moratorium,” notes Norfleet.

Nevada's Film Credit

Despite Connecticut's moratorium on films, Nevada is forging ahead by enacting a tax credit for producers of film, television, and visual media productions in the state.

Starting Jan. 1, 2014, a transferable tax credit is available equal to 15 percent of the cumulative qualified expenditures and production costs, plus the following amounts:

• an additional 2 percent of the cumulative expenditures and costs if more than 50 percent of the production's below-the-line personnel are Nevada residents; and

• an additional 2 percent of the cumulative expenditures and costs if more than 50 percent of the production's filming days occurred in a Nevada county in which qualified productions incurred less than $10 million of direct expenditures in each of the two years immediately preceding the credit application date.


To qualify for the credit, at least 60 percent of the production's total qualified expenditures and production costs must be incurred in Nevada. After the production is complete, the producer must submit a certified audit showing the production incurred at least $500,000 in qualified expenditures and production costs.

Each producer is limited to no more than $6 million in credits per production. The total amount of credits that may be approved by the Nevada Governor's Office of Economic Development must not exceed $20 million per fiscal year.

Favorable Jurisdictions

Do all of these changes mean film production companies will now flock to Nevada to take advantage of the state's new film tax credit? Jennifer Cooper, Communications Director at the Nevada Governor's Office of Economic Development, notes that questions about Nevada's film tax credit are “difficult to address” at this time because the state is just now starting the rulemaking and policymaking process for the program.

Nonetheless, “producers are still considering what jurisdiction will benefit their production the most,” Norfleet says. “Taking into account the current environment of feature films in 2013, as well as the fact that most states have some type of film incentive, studios will look for the most advantageous jurisdiction for their production overall,” he adds.

Connecticut H.B. 6706 took effect July 1.

Nevada S.B. 165 became effective June 11, for administrative purposes necessary to carry out the legislation's provisions, and Jan. 1, 2014, for all other purposes.

Full text of H.B. 6706 is available online at S.B. 165 is available online at

By Kathleen Caggiano  

For a discussion of the film production tax credit in Connecticut, see 1450-2nd T.M., Credits and Incentives: AL Through HI, at 1450.12.H.1. For a discussion of the tax incentives available in Nevada, see 1470-2nd T.M., Credits and Incentives: MO Through OK, at 1470.09.