At press time, Gov. Rod R. Blagojevich (D-IL) was expected to sign into law a measure that will replace and significantly boost the existing financial incentive designed to encourage filming in Illinois. The incentive will no longer be confined to a tax credit on wages. Instead it will expand beyond that to cover virtually all production expenditures made in Illinois.
The new measure calls for a 20 percent tax credit on total Illinois production spending, nearly doubling the current program which provides a 25 percent wage-based tax credit on the first $25,000 earned by each Illinois resident (except the two highest paid artisans) working on a project being lensed in the state.
To qualify for the new incentive, minimum feature film and TV program production spending in Illinois would have to be greater than $100,000 per project. Minimum spending on a commercial or advertising-related project (such as branded content less than 30 minutes) has to exceed $50,000. The salary cap on wages eligible for the new credit will be raised to $100,000 per employee per production (without the exclusion of the two top Illinois-based wage earners).
Mark Androw, executive producer of Chicago-headquartered Story, a production house which also has offices in New York and Los Angeles, noted that on a $200,000 spot production job in Illinois, for example, the tax credit would amount to $40,000. If editing, post and visual effects were also done in the state, boosting the hypothetical ad project’s expenditures to $400,000 in Illinois, the resulting credit would be $80,000.
Androw, who is past national chairman of the Association of Independent Commercial Producers (AICP) and a current board member of the Illinois Production Alliance (IPA), related that the tax credit is transferable and that there is a robust secondary market in which these credits are being bought by individuals and businesses with tax liability in Illinois. He estimated that the purchase price can generally amount to about 80 cents on the dollar, meaning that the aforementioned $40,000 credit could fetch $32,000 or more.
Production companies could choose to handle this tax credit in different ways. Androw noted that if the production house were getting back $32,000 on a job, it could for instance translate that into a reduced markup for the client, providing the advertiser and/or agency with an extra incentive to shoot in Illinois.
Androw sees this new measure as a boon for commercialmaking in Illinois–and for the rest of the country. Regarding the latter contention, he explained, “Other states may feel the need to keep up with what Illinois has done. We see states upping the incentives ante in order to have a competitive edge in attracting production. The Illinois measure raises the bar, which could prove to be good for shooting in other parts of the country that look to match or exceed what’s being done here.”
The new incentive initiative is slated to be retroactive to May 1, 2006 and run through December ’07.