Film Tax Credit Legislation
In 2005 and modified in May, 2007 the Commonwealth of Massachusetts has instituted a program that provides an incentive in the form of Massachusetts tax credits to the motion picture industry to work in Massachusetts.
A qualifying project is a Motion picture defined as follows:
“Motion picture”, a feature-length film, a video, a television series defined as a season not to exceed 27 episodes, or a commercial made in the Commonwealth, in whole or in part, for theatrical or television viewing or as a television pilot. The term “motion picture” shall not include a production featuring news, current events, weather and financial market reports, a talk show, a game show, sporting events, an awards show or other gala event, a production whose sole purpose is fundraising, a long-form production that primarily markets a product or service, a production containing obscene material or performances, a production used for corporate training or in-house corporate advertising, or other similar-type productions.
The inclusion of the term digital media project within the definition of a motion picture that is made for theatrical or television viewing is new as of 2007 and clarifies that the term motion picture includes digitally enhanced films. This term does not reference electronic games, computer or video games, video game consoles, or other productions unrelated to commercial filmmaking.
Aggregation of Projects
Multiple episodes of a television series or multiple commercials that are created for the same client may be aggregated to qualify as a single motion picture. However, each episode of a television series may not be treated as a separate motion picture for purposes of these credits.
Types of MA Film Tax Credits
There are two types of MA Film Tax Credits:
(1) Payroll credit
To qualify payment has to constitute MA source income tax, i.e. be subject to MA income tax.
Credit is equal to 20% of qualifying payroll.
Shall not include “High Salary Employee”, one making $1,000,000 or more.
(2) Production Expense Credit
Credit is equal to 25% of MA production expenses.
High Salary Employee payroll can be included here as long as other payroll credit tests are met.
Qualifying production expense/cost is defined as follows:
“Production expense” or “production cost”, preproduction, production and postproduction expenditures directly incurred in the production of a motion picture. The term shall include wages and salaries paid to individuals employed in the production of the motion picture; the costs of set construction and operation, editing and related services, photography, sound synchronization, lighting, wardrobe, makeup and accessories; film processing, transfer, sound mixing, special and visual effects; music; location fees and the cost of purchase or rental of facilities and equipment or any other production expense. The term shall not include costs incurred in the marketing or advertising of a motion picture, any costs related to the transfer of tax credits or any amounts paid to persons or businesses as a result of their participation in profits from the exploitation of the production.