Three ways a credit turns into cash
Programs differ mainly in what you can do with the credit once it is certified. A non-refundable credit only reduces tax the company owes, which is little help to a single-purpose production company that has no local income. A refundable tax credit pays out the amount the company can't use as a refund. A transferable tax credit can be sold to a local taxpayer who does owe tax, usually for less than face value.
| Program | Headline rate | How you get value | Source |
|---|---|---|---|
| Georgia | 20%, plus 10% Georgia Entertainment Promotion uplift | Transferable, sold to Georgia taxpayers | Georgia Film Office |
| New York | 30% of qualified production costs | Refundable credit | NY Tax Department, ESD |
| United Kingdom (AVEC) | 34% for film | Taxable expenditure credit paid through the company tax return | BFI |
The headline rate is applied to qualified spend, which is a subset of the budget. On a $3M film where $2.2M is spent in Georgia and qualifies, a 30% combined rate returns $660,000. Applying 30% to the whole $3M would have suggested $900,000.
A worked example on a $1.5M shoot
A production spends $1,500,000 in a state offering a 25% transferable credit. The production accountant excludes $300,000 of non-qualifying costs (out-of-state post, insurance premiums bought elsewhere, above-the-line fees the program caps). Qualified spend is $1,200,000.
- Credit earned: $1,200,000 x 25% = $300,000
- Sold at 90 cents on the dollar: $270,000
- Less a broker fee, assumed here at 2% of face: $6,000
- Net cash to the production: $264,000
That $264,000 arrives after audit and certification. If the producer needs it to close the budget before photography, a lender advances a portion of it against the expected credit, and interest and fees reduce the number again.
Where producers get tripped up
The most common mistake is budgeting the credit at the headline rate on the full budget. The second is forgetting the calendar: minimum spend thresholds, pre-approval applications before photography, and audit deadlines are conditions of the credit, and missing one can void it. Some programs also have annual caps and allocate credits on a first-come basis, so a late application can land in next year's funding round.
Where to go next
Compare programs on the incentives hub, run your own numbers in the incentive calculator, and see how the credit sits alongside equity and pre-sales in film financing. For how credits compare with cash payments, read film rebates vs tax credits and the cash rebate entry.