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 corporation, partnership, limited 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 pictures, documentaries, television series, music videos, commercials, miniseries, video 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 construction, props, lighting, wardrobe 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.

  1. 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.
  2. Upon completion of a production, an eligible production company must apply for a tax credit certificate no later than ninety (90) days after the last production expense is incurred in the state; the eligible production company must submit a cost certification of its eligible production expenses. After this is verified, a tax credit certificate is issued. The eligible production company is not entitled to claim tax credits before the production tax credit certificate is issued.

Cost Certification. An eligible production company must provide independent certification (audit) of the amount of its production expenses and costs when it applies for a tax credit voucher. The eligible production company is required to use an audit professional, chosen from a list DECD compiles, to provide the independent certification.

Administrative Fee. An administrative fee will be charged to cover the department's costs in analyzing submitted applications.

Interim Tax Credits. No interim tax credits will be issued.

Tax Benefit

The tax credits may be applied against the corporation business tax or insurance premium tax as provided in Chapters 207 and 208 of the Connecticut General Statutes.

Claiming the Tax Credits. The tax credits must be claimed against the corporation business tax or insurance premium tax for the income year in which final certification for the qualified production is made. Any tax credit not used in the income year in which final certification is made may be carried forward for, or in, the five immediately succeeding income years. The tax credits are nonrefundable.

Assigning the Tax Credits. An eligible production company may sell, assign or otherwise transfer the tax credits to another taxpayer. Written notification of such transfer must be submitted jointly by the transferor and transferee no later than thirty (30) days after such transfer.

The preceding information is subject to legislative change. The State of Connecticut shall not be liable for any errors in this information or responsible for any acts taken in reliance thereon.

Related Resources

PDF documents

Excel documents

Contact

For more information, contact Ed Ruggiero, Film Tax Credit administrator, at (860) 500-2411 or Ed.Ruggiero@ct.gov.