Virginia runs two incentive funds under one set of rules. The Virginia Motion Picture Tax Credit Fund pays a refundable tax credit under Va. Code 58.1-439.12:03, and the Motion Picture Opportunity Fund pays grants. The Virginia Department of Taxation and the Virginia Film Office wrote one set of guidelines for the tax credit and apply it to the grant fund too, so a production doesn't have to pick a lane before calling the office.
The tax credit has three layers, and the resident payroll layers are where Virginia differs from a flat-rate state.
The three layers of the credit
| Layer | Rate | Applied to |
|---|---|---|
| Base credit | 15%, or 20% in an economically distressed area | All qualifying Virginia expenses, wages included |
| Resident payroll credit | 10% if Virginia costs are $250,000 to $1 million; 20% if over $1 million | Total Virginia resident payroll |
| First-time industry employee credit | 10% | Payroll of Virginia residents in their first paid job as an actor or crew member, anywhere |
The Virginia Economic Development Partnership designates the distressed areas. Resident wages count twice: once in the base and again in the payroll layer. Nonresident wages count only in the base. Nobody's compensation counts above $1 million, and Virginia makes no distinction between above and below the line.
Worked examples
A $1,000,000 feature spends $750,000 in Virginia. Virginia resident payroll is $300,000, and $20,000 of that goes to local PAs and actors in their first paid job.
- Base: 15% x $750,000 = $112,500
- Resident payroll (Virginia costs under $1 million): 10% x $300,000 = $30,000
- First-time employees: 10% x $20,000 = $2,000
- Total: $144,500
Shoot the same show in a designated distressed area and the base becomes 20% x $750,000 = $150,000, for a total of $182,000.
A $5,000,000 feature spends $3,800,000 in Virginia, with $1,200,000 in resident payroll.
- Base: 15% x $3,800,000 = $570,000
- Resident payroll (Virginia costs over $1 million): 20% x $1,200,000 = $240,000
- Total: $810,000
That one project would take about 12.5% of the $6.5 million the statute allows per fiscal year. The memorandum of understanding you sign before shooting states the maximum credit allocated to your project.
Spend that trips people up
Big purchases count only by how much they lose in value. For goods priced at $25,000 or more, you count the purchase price minus fair market value when production wraps. The guidelines use a picture car bought for $50,000 and worth $40,000 at wrap, which counts as $10,000 of qualified spend.
Independent contractors on a 1099 aren't earning wages, so they can't count toward the resident payroll layers. Their payments might still count toward the base as goods and services. Bonuses usually count as wages. Health premiums, pension contributions, and workers' comp premiums paid for cast and crew count if the company treats them as wages. An episodic series counts an entire season as one production. A production that runs past one tax year applies separately for each year, and approval for one year doesn't guarantee the next.
Applying
- Get fully funded, with a multi-market distribution contract, without counting the credit.
- Email the application with the script, budget top sheet, and proposed schedule at least 30 days before principal photography.
- Sign a memorandum of understanding with the Virginia Tourism Authority covering expected Virginia spend, timeline, and the maximum credit.
- Go into pre-production within 90 days of approval and make a best-faith effort to shoot 50% of principal photography days in Virginia.
- Put the "Filmed in Virginia" credit and the Virginia is for Film Lovers logo in the end credits.
- After production, the Authority certifies the final credit and names the fiscal year when the Department of Taxation will refund it.
Virginia also exempts production supplies and equipment from sales and use tax. Hotel stays of 90 days or more are exempt from state sales tax and some local lodging taxes.
Virginia against its neighbors
West Virginia pays a 27% transferable credit, 31% with ten West Virginia hires, from a $50,000 minimum and with no annual cap, so a small show near the border should run both states' numbers. Virginia's refundable credit comes back without a broker and rewards Virginia payroll more heavily. North Carolina, Maryland, and Tennessee also border Virginia. Run the layers through the incentive calculator, read how film tax credits work, and compare everything on the incentives hub.
The Funding page in Storiara estimates an incentive from your project's Virginia locations and shoot days and can apply it to the budget. It uses one base rate and skips the payroll layers, so add those yourself.