Illinois Updates Film Tax Credit for Non-Resident Stars
Earlier this year, I published an article called Divergent and the Illinois Film Tax Credit, which included a thoroughly researched step-by-step plan for elevating Illinois from merely a “location city” (when you need a certain look, like London or Las Vegas) to a self-sustaining, world-class, Production Hub (like Los Angeles, NYC, Louisiana and Georgia).
Not to toot my own horn, but according to ReelChicago, Senate Bill 1816 was introduced last Spring (one month after I published my guidelines) and I’m thrilled to see that SB 1816 follows Step 2 of my recommendations, almost verbatim:
- It extends the 30% transferable tax credit to out-of-state (non-resident) performing artists, and;
- It raises the salary cap to $1 million, for both resident and non-resident performing artists.
One notable difference, is that the incentive excludes the first $100,000 of wages paid to non-resident cast. So if you pay an actress $1 million (who lives in L.A.), the production will receive a 30% tax credit for $900,000 of the $1,000,000 wages (i.e. $270,000 tax credit). The rationale being that the state hopes to entice producers to hire local stars, as opposed to flying them in. This is great news for the Vaughn, Schwimmer, Cusack, Harvey, Garlin, etc. who already live here (not all of whom make $1 million film paychecks, but could easily earn that in a television season. This is also a good enticement for actors and actresses who currently or eventually shoot here, to move to the city.
I took a lot of flack for openly-suggesting that the incentive could and should be fixed; so kudos to Sen. Patricia Van Pelt (D-Chicago) for introducing the bill in the Senate, and extra kudos to the IPA for recognizing a good opportunity, defying the conventional paranoia, and pushing it through.
Following is a recap of my guidelines from the original post – I hope we keep moving the ball down-field:
Here is how I would fix the Illinois Tax Credit, to develop a self-sustaining film industry:
- Allow wages for out-of-state department heads to qualify for the credit. This helps everybody.
- Allow wages for out-of-state above-line-talent talent (who are working in the state and paying state taxes) to qualify for the credit. If a wage cap on non-resident ATL is necessary, then cap it at $1-million.
- Completely remove the wage caps on Illinois resident cast and crew. This is how you keep your aspiring talent from leaving the state, and how you entice successful talent to stay or move here (especially TV series stars). More than anything else, the wage caps penalize home-grown talent for becoming successful, especially when they’re the ones who will eventually have the clout to lure productions to film here.
- To bolster a feature and television post-production industry, allow productions to file twice for their tax credit certification (but only if they’re posting in Chicago).
- This allows productions to apply for certification after they wrap physical production (which is where the majority of spending is). This affords producers the opportunity to pay down the majority of their tax credit loans, which usually have an interest clock running.
- Then file a second time to capture the credits generated from IL post-production spending, which can take months to complete (the second filing is usually a smaller credit, but one that takes take a long time to claim.)
- Louisiana has been doing this for years and they have a vibrant post-production industry across multiple cities.