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Film and Digital Media Tax Credits

October 11, 2021
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WRITTEN BY Jill Barnas

Executive Summary

In the last 30 years, states have enacted numerous film and television production incentives, including tax credits for film production. However, in the last decade, many of these programs have ceased to exist or have adopted stricter requirements for qualifying expenses and annual program caps. Missouri’s Film Production Tax Credit Program sunsetted in 2013, resulting in many projects set in Missouri, such as Three Billboards Outside Ebbing, Missouri and Ozark, to be filmed elsewhere. When states have incentives for film and television production, there is a possibility to boost the economy by job creation and generating revenue. However, long-term economic outcomes of investing in film production remain unclear and therefore, may pose unforeseen risks with taxpayer dollars.

Highlights

  • In 2013, the Missouri Film Production Tax Credit expired by recommendation of the Missouri Tax Credit Review Commission, because it failed to provide a positive return on investment.
  • A film incentive program in Missouri has the possibility to create jobs, attract a local film industry, and increase state tourism, resulting in increased tax revenue growth.
  • In Missouri, there are 42 programs across universities for film and TV production; a film production tax credit could possibly help retain this workforce and talent in the state.
  • Recent proposed legislation seeks to restore the film tax credit with a program cap of $4.5 million and would place Missouri among the lowest of 12 other states with incentive programs under $10 million. 

Limitations

  • Due to state differences, there is no systematic evaluation system to determine what incentive form attracts a large number of media productions and best positively impacts the local economy. 
    • Since proposed economic incentives are low compared to other states, it is unclear if a tax credit would attract new productions in Missouri.
  • The net impacts of state media incentive programs on economic outcomes such as return on investment and workforce development are still unclear, and  specific research may be needed to determine the effectiveness of the film tax credit.
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