North Carolina production incentives

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The North Carolina film industry has been hanging in limbo. A bill that would up the state's film and TV production tax credit to 25% (effective Jan. 1) -- and put it back into the domestic incentive race -- has been stuck in the state assembly since it was passed by the state senate late last month. But things are starting to look up.

"Last week, it passed the House Commerce Committee, and it's going to the finance committee now," North Carolina Film Office director Aaron Syrett said Monday, "so I'm cautiously optimistic."

In the meantime, North Carolina offers a 15% tax credit (enacted in 2007) for productions with a minimum in-state spend of $250,000, with a per project payout cap of $7.5 million.

The credit is refundable, meaning that productions get a check from the state for its full value, unlike a transferable credit, which typically has to be sold to a third party at 8 to 90 cents on the dollar. Also, filmmakers pay only a 1% sales-and-use tax (the standard rate is 4.25%) on the in-state purchases and rental of all production-related materials. Spending for all goods (fuel, food, airline tickets, etc.) purchased or leased from a North Carolina business qualifies.

Eligible productions include film, television, direct-to-video/DVD features, episodic television series, television miniseries, theatrical animation productions and commercials. (The state counts a multiple-episode TV series as single production.) Ineligible productions include political advertising, TV productions of a news program and live sporting events, radio productions and anything containing material state law defines as obscene.

In 2008, the incentive was extended to run through Jan. 1, 2014, and expanded so that production-related insurance and individual wages of up to $1 million would qualify. It also added a requirement that North Carolina receive onscreen credit.
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