Arizona offers film makers tax credits

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Over the years, film makers have used Arizona as the backdrop for movies like Little Miss Sunshine (2006) and Jerry Maguire (1996). But in recent years we have seen many film producers use Arizona as the setting for their movies, but the filming was done in neighboring states such as California, New Mexico, Nevada and Utah because these states subsidized productions. This is not uncommon, and many other states also offer these incentives. Now Arizona has joined in offering film makers tax credits.

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On July 6, 2022, House Bill 2156 was passed into law. The Arizona Motion Picture Production Program will offer tax credits to qualified film, television and commercial productions that primarily film in the state. This program will start at $75 million in 2023 and grow to a $125 million program by 2025.

The program features a tiered tax credit system that will follow these brackets:

  • For up to $10 million spent, the tax credit is 15%.
  • For $10 million-$35 million spent, the credit is 17.5%.
  • For more than $35 million spent, the credit is 20%.
  • Productions are also eligible for a 2.5% bump on labor costs if they hire Arizona residents or if they are a tenant at a local production company for 5+ years.

The maximum amount of tax credits that can be claimed by production companies will tap out at $25 million. If production companies are wanting to qualify, they should make sure they meet the following requirements:

  • Filming should primarily take place in Arizona, either in a studio or on location.
  • All preproduction, postproduction and editing should also take place in the state if filmed primarily at a practical location as opposed to a production facility.
  • The motion picture production company must maintain the company’s production labor positions in Arizona, include in the credits for each motion picture production an acknowledgment that the filming took place in Arizona, and other application and certification requirements.

This new tax incentive could be great for the Arizona economy, bringing in a lot of jobs as well as a lot of taxable income for the state. Those against the bill claim it will give more money to those coming here to film then it will generate for our economy. Only time will tell if this will be a beneficial bill for our state. To ensure this tax program is worth doing, it will be audited every five years and ten years after the initial audit the Arizona Commerce Authority will make a recommendation as to whether to continue the program.

Contact your Henry+Horne advisor for more information!

Haylee Coleman