Incentives Watch: New York Proposes Music Production Tax Credit to the Tune of $60 Million


From the New York Philharmonic to the now-closed punk rock club CBGB, New York’s impact on music history is undeniable, and now some lawmakers want to ensure the future is also bright for New York’s music industry. In February, Assemblyman Joseph R. Lentol introduced a billproposing a tax credit for music production in the state. The bill recently attracted a lot of attention due to a flurry of articles about it, including a recent article in the New York Times as well as lobbying from New York Is Music, a group supporting the growth of the New York music industry.

The proposed credit would be equal to 20 percent of the costs incurred in the production of music. Under the proposed bill, the aggregate amount of credits available to music productions in a year would be $60 million. New York already allows credits for music composition as a qualified post-production expense for films under a $420 million tax credit for film production. However, unlike some other states, New York specifically disallows music videos from claiming the film credit.

The proposed $60 million credit in New York is quite generous when compared to Louisiana, which caps its music production credit at an aggregate of $3 million per year, though Louisiana does allow taxpayers to claim up to 25 percent of their production expenses. In addition, concerts in Louisiana are eligible for a tax credit reserved for live performances.

A music production credit was proposed in Tennessee in 2011, but the bill ultimately didn’t pass. Tennessee still tries to attract musicians with its history and music industry infrastructure. Tennessee also encourages music-related businesses to apply for a grant under the FastTrack Job Training Assistance Program.

Indiana specifically includes audio productions as a qualified investment under the Hoosier Business Investment tax credit. The credit, designed to promote job growth in Indiana, has a provision that offers a 10 percent credit of the cost for purchasing machinery, equipment or special purpose buildings for audio productions.

However, many other states that offer tax credits for musical production have the incentives tied to other credits. For example, even though Georgia offers a credit of up to 30 percent for sound recordings and music compositions, the music must be for film, television or digital entertainment projects, though music videos are included under those categories. Michigan and Alabama also consider music to be a valid production expense for a film or digital project, but do not have any stand-alone music production credits.

Those who support the music production credit hope that it will prevent New York musicians from eschewing the city with Carnegie Hall in favor of Preservation Hall in New Orleans. And the music production credit could even grow the industry in New York the same way the film production credit did. A 2012 study by HR&A Advisors Inc. for the Motion Picture Association of America showed that New York enjoyed a 25 percent growth rate in the film industry from 2008 to 2011. If producing music in New York becomes more affordable, then many musicians will, as Sinatra said, want to be a part of it.

Continue the discussion on LinkedIn:  Should New York enact a music production credit?

For more information about New York’s tax incentives, check out Bloomberg BNA’s Credits and Incentives Portfolios by signing up for a free trial of the Bloomberg BNA Premier State Tax Library today.

By:  Rishi Agrawal

Follow Rishi on Twitter at: @RAgrawal_SALT.
Follow BBNA on Twitter at: @BBNATax.

Join Bloomberg BNA's State Tax Group on LinkedIn.