Credit Programs Vary
Film projects, theater productions, software development and album recordings all qualify for some sort of Louisiana tax incentive through a somewhat generous tax credit program within the Louisiana Department of Economic Development.
Tax credits operate as a form of state subsidy for the industries, offering the sort of leverage state officials have said is needed to lure these types of projects from more established markets like Los Angeles, Austin or New York City.
The details depend on the type of media:
Movie projects: They can earn tax credits amounting to up to 35 percent of the movie’s budget spent in the state, assuming at least $300,000 is spent in Louisiana.
There is no cap on what amount the state will fund.
The tax credits can be used by the production company to offset its own tax liability to the state at a simple 1:1 ratio.
Or, the production company can refund the credits back to the Louisiana Entertainment office, a division of the Louisiana Department of Economic Development, for an 85 percent return — the most common option, say officials.
“And we turn them (tax credits) over to (the Louisiana Department of) revenue, saying, ‘Yeah, they’ve transferred them back to the state of Louisiana. Go ahead and issue them a check,” explained Chris Stelly, executive director of Louisiana Entertainment.
Or, the production company can sell its tax credits to a broker on the open market.
Digital media projects: This includes software development, video games and other technology projects, which have fewer options e_SEmD for the time being.
These firms can sell their credits only to a brokerage firm, which generally offers assistance with the sometimes complicated paperwork process.
“In many cases, we’ve become the advocate to help them learn,” said Leonard Alsfeld, a broker with FBT Film and Entertainment. “They (digital media firms) need great counseling throughout the whole process.”
However, after the new year, digital media projects will be eligible for the same 85 percent direct refund from the state that film projects are eligible for, due to changes in state law.
Live performance tax credit: This is the newest entertainment industry incentive program and the only one like it in the country.
It allows for tax credits of up 35 percent of a project’s in-state budget. At least $100,000 must be spent in Louisiana to qualify.
Also, theater renovation projects qualify for the tax credit program, though these credits are capped at $10 million per project with a $60 million annual state cap.
This means the most any one theater renovation or infrastructure-type project can earn is $10 million in tax credits.
And state law does not allow Louisiana to pay out more than $60 million per year in tax credits to live performance theater infrastructure projects.
Like the other tax credit incentive programs, credits associated with the live-performance projects can be refunded at the 85 percent state rate or transferred to a broker at whatever the market rate proves to be.
Sound recording projects: They qualify for a 100 percent production rebate on 25 percent of the production costs occurring in the state. The project must spend at least $25,000.
“It’s a direct refund — dollar-for-dollar,” Stelly said of the sound-recording incentive program.
“All of this is within LED,” Stelly said, explaining the process. “We review the submissions. We issue the tax credits. And then basically, (the Department of) Revenue’s role is to accept the credits.”