Location:
MEDIA; TAXATION;
Scope:
Connecticut laws/regulations; Other States laws/regulations;

OLR Research Report


December 7, 2011

 

2011-R-0425

CONNECTICUT AND ALASKA FILM TAX CREDIT PROGRAMS

By: John Rappa, Chief Analyst

You asked us to compare Connecticut's and Alaska's film production tax credits.

Connecticut's and Alaska's film production tax credits are based on the amount of money filmmakers spend in these states to produce films, but the laws authorizing the credits impose different limits, eligibility requirements, and rules for using the credits.

CREDIT AMOUNTS AND LIMITS

Connecticut's maximum credit is lower than Alaska's, but, as Attachment 1 shows, this difference reflects the way the states structure their credits. Connecticut offers a three-tiered credit in which the amount depends on how much filmmakers spend in the state to produce a film. A filmmaker qualifies for the maximum 30% credit if he or she spends at least $1 million in the state.

Alaska offers a maximum 44% credit, which consists of a base 30% credit and three additional credits which together total 14%. A filmmaker qualifies for the base credit if the production costs incurred in Alaska totaled at least $100,000. (A filmmaker who incurs at least $100,000 in production costs in Connecticut qualifies for a 10% credit.) In addition to the base credit, the filmmaker qualifies for credits equal to:

● 10% of the wages paid to Alaska residents,

● 2% of the production costs incurred in the state during specified months, and

● 2% of the production costs incurred in designated rural areas.

ELIGIBILITY CRITERIA

As noted above Connecticut and Alaska tie their credits to the amount of production costs a filmmaker incurs in the respective states. But Connecticut imposes additional requirements. To qualify for Connecticut's credits, a filmmaker must:

● conduct at least 50% of the principal photography days in Connecticut or

● incur 50% or at least $1 million of post production costs here.

RULES FOR USING THE CREDITS

Connecticut's and Alaska's rules for using the credits are similar. Neither state refunds unused credits, but allows them to be carried forward or transferred to other taxpayers. The states limit carry forwards or transfers to three years. But Connecticut limits the proportion of credit taxpayers can carry forward per year to (1) 50% of the credit allowed in 2011 and (2) 25% of the credit allowed in 2012 and subsequent income years. It exempts from these limits:

● transfers by companies that are not liable for insurance premium or corporation business taxes,

● transfers by companies that are not liable for these taxes but that directly or indirectly own at least 50% of another entity liable for the business entity tax, and

● productions created in whole or in part in a Connecticut facility meeting statutory criteria.

Attachment 1: Comparison of Connecticut and Alaska Film Production Tax Credits

Tax Credit Characteristic

Connecticut

Alaska

Name

Film Production Tax Credit (CGS 12-217jj, as amended by PA 11-6 and PA 11-61)

Alaska Film Production Incentive Program (AS 43.98.030 and 44.33.231-44.33.239)

Applicable Taxes

Insurance Premium

Corporation Business

Corporate Income Tax (Alaska Net Income Tax)

Incentive Amount and Limit

Three-tiered credits:

10% for expenditures between $100,000 and $500,000

15% for expenditures between $500,000 and $1 million

30% for expenditures over $1 million

Base Credit: 30% of qualified production expenditures incurred in Alaska

Additional Credit

+ 10% of wages paid to Alaska residents

+ 2% of production expenses incurred between October 1 and March 30

+ 2% of production expenditures incurred in rural areas.

Eligibility Criteria

Film company must incur specified film production expenses and costs, including costs for production equipment and trailers, in Connecticut and

Beginning January 1, 2010, it must also:

conduct at least 50% of principal photography days in Connecticut or

incur 50% or at least $1 million of post production costs here

Film company must spend at least $100,000 in Alaska

No minimum photography days or hiring requirement (but the state offers additional incentives for hiring Alaska residents and making films in rural areas.

Rules for Claiming Credits

Credits are not refundable, but (1) may be carried forward for up to three years and (2) sold, transferred, or assigned up to three years

Percent of credit that can be transferred per year limited to 50% in 2011 and 25% in 2012 and subsequent income years. The following are exempted from these limits:

transfers by companies not liable for insurance premium or corporation business taxes

transfers by companies not liable for these taxes but that directly or indirectly own at least 50% of another entity subject to the business entity tax

productions created in whole or in part in a Connecticut facility meeting statutory criteria

Credits are not refundable, but (1) may be carried forward for up to three years and (2) sold, transferred, or assigned up to three years

JR:ts