Recently, Georgia’s film and television production tax credit has undergone some significant changes as a new bill has been passed from the House to the Senate. One of the most notable changes is the annual limit on tax credit transfers, which has now been set at 2.3% of the state budget, down from the previous 2.5%. This amounts to approximately $830 million at current levels, a decrease from the initial $900 million proposed in the House. However, despite the reduction in the cap, the latest Senate version of the bill includes major exemptions that essentially render the cap ineffective.
The most significant exemption in the new bill is that productions filmed at the largest Georgia studios will not be counted towards the cap. According to the bill, a studio is considered “big” if it has either made an investment of $100 million between 2023 and 2027 or has a stage space of at least 1.5 million square feet. This exemption means that popular studios like Trilith, known for being the home to Marvel and other big franchises, are not subject to the cap. Furthermore, smaller sound stage owners are only exempt if they are located in rural areas outside of the Atlanta metro area, leaving them more susceptible to the cap.
Despite the initial intention of setting a limit on the tax credit transfers, the revised bill now exempts hundreds of millions of dollars worth of tax credits from the cap. This has led some lawmakers to question the effectiveness of the cap, with some noting that there may not even be a cap at all. The bill is currently up for review by the Rules Committee, and if it does not make it onto the schedule by Monday, it may not pass through the legislature since the session is nearly over. If the bill does move forward, it will need to make its way back to the House for further revisions before the deadline.
The film and television industry in Georgia has flourished in recent years due to the generous tax credit regime offered by the state. Georgia has become one of the top three production hubs in the world, attracting Hollywood studios and creating thousands of jobs. The tax credit program has cost the state hundreds of millions of dollars annually, but has also brought in significant revenue and stimulated economic growth. The new bill, House Bill 1180, was designed to provide more predictability in the expected annual costs of the tax credit program by setting a cap on transferred credits.
Although the new bill aims to address some of the concerns surrounding the tax credit program, critics have pointed out that it still leaves room for uncertainty. The cap is not a strict limit, as it allows credits exceeding the cap in one year to be carried over to the next. This rollover provision could potentially create fluctuations in the total amount of tax credits claimed each year, leading to uncertainty for both the industry and the state.
The changes made to Georgia’s film and television production tax credit cap represent a step towards providing more clarity and stability in the tax credit program. However, the significant exemptions and loopholes in the new bill may still raise questions about its effectiveness in controlling the costs of the program. As the bill moves through the legislative process, it will be crucial to address these concerns and ensure that the tax credit program continues to support the growth of the industry while also being fiscally responsible.
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