Film subsidies

States across the country subsidize companies that make movies, TV shows, and even commercials. The practice has become so prevalent that nearly every major production receives public money. The most common forms of financial assistance are transferable tax credits and sales and use tax exemptions. Despite their significant costs – in Georgia, the cost exceeds $1 billion  annually- those programs have little transparency. The giveaways continue despite extensive independent research by academics and economists showing negative return on investment. 

Their basic conclusion: For every $1 a film company receives, the public recovers around a dime.  


Louisiana was the first state to create film subsidies back in 1992 and expanded its program significantly in 2002. The program quickly attracted controversies. The costs ballooned as salaries of superstars were permissible expenses for which the studious were receiving public payments. California, a home to film industry for decades, created its program in 2009. By then, 44 states had film subsidies. However, state negative fiscal and economic impact reviews, corruption, abuse, as well as budget constraints pushed state legislators to eliminate or significantly reduce those programs. By 2020, 13 states dropped those programs. States also started capping their programs in fears to prevent substantial impacts on state budgets, as seen with the Georgia program, which has no caps. During the Covid pandemic, states started reintroducing the programs, or increasing their caps. Among these were Arizona, Oklahoma, Oregon, and West Virginia. 

Transferable and refundable tax credits 

Most entertainment industry subsidies are in a form of transferable or refundable income tax credits, which are essentially cash payments.   

The credit value equals a percentage of in-state production costs or expenditures. The most generous programs refund 40% of a company’s spending. That is, if a production company spends $20 million on eligible expanses in a state, it receives $8 million in credits.  

Because film projects are short-term and production companies are structured as Limited Liability Companies (LLCs), they tend to have little, if any, state income tax obligation. Tax credits themselves have very little value. The real monetary gain for film companies happens when they sell or transfer the credits – for cash. The buying companies, the identities of which are usually unknown, can then use those credits to lower their state income tax obligations. In some instances, credits can be sold back to the state that issued them. The public is hit twice – first by giving the film company the credits, then by the reduced taxes companies pay. The process is facilitated by tax credit brokers, companies that find buyers for a fee.  

To illustrate: a production company spends $20 million in a state, which qualifies it for $8 million in credits. The production company sells those credits to another company for 85 cents on the dollar, netting $6.8 million in cash. The buying company now can apply the $8 million credit to lower its income tax obligation, saving itself about $1.2 million.  

Refundable tax credits mean that if a company doesn’t use all of its credits, rather than return the difference back to the public, which unknowingly provided the original subsidy, a state will return the value of the unused credits – in cash. 

On top of all this, production companies are frequently offered sales and use tax exemption for purchases of goods and services such as lodging and catering. 

A few localities, especially in California (the cities of Los Angeles and San Francisco and the counties of Santa Barbara and Riverside) offer their own subsidy programs. Often those lower local business taxes, offer rebates, or provide fee waivers. 


Entertainment industry subsidies can be very costly. Georgia’s Film Tax Credit has been the most expensive program in the country. In FY 2023, it is estimated the program will cost the state over $1 billion (the massive cost is caused by the lack of annual or per-project caps). New York has the second most expensive program, costing the state around $600 million annually. Other expensive programs are in California and Louisiana.  

Cost benefit and economic impact analysis 

Film offices that administer the subsidy programs tend to hire private, pro-industry consultants to come up with positive economic impact analyses. Those “studies” often only present the benefits of those programs (jobs created and investment made), but rarely look at costs (especially the lost tax revenue). Better studies of film subsidies are available from state independent agencies which specialize in program evaluation.  

For example, the Florida’s Office of Program Policy Analysis and Government Accountability (OPPAGA) and the Office of Economic and Demographic Research (EDR) found that the state lost 93 cents for every dollar invested in its entertainment industry subsidy; the Massachusetts Tax Expenditure Review Commission found that the state’s program lost 86 cents on every dollar and calculated a per job price at $100,000; the Georgia’s Department of Audits found a loss of 90 cent per dollar for its film subsidy.  

Be sure to check your state auditor or legislative service agency to see if they’ve conducted entertainment subsidy evaluations. 

Academic studies also found that film subsidies do not have significant impacts on employment growth.   


Recipient-level transparency varies between the states, but overall, the programs have limited disclosure or are not transparent at all. In “Financial Exposure,” a 51-state “report card” study that looked at transparency of state subsidy programs, Good Jobs First found that out of 29 film production programs, 14 do not have any recipient disclosure. That is, we know very little about which production companies received public money or how much.  

The states that do disclose film subsidy recipients (for example Connecticut, California, New York, New Jersey) usually provide only the names of LLCs created specifically for a single project. Transparent programs tend to include job and expenditure data, but rarely the nature of those jobs. Information on location of the projects is also limited. Some programs disclose only production titles but not company names. 

Buyers of credits are almost never disclosed. In a rare example, Illinois makes seller-buyer data available via freedom of information requests. The data shows that the companies that buy and use the credits are often large retailers, including Walmart, Comcast, K-Mart, and Apple.  

Additional Sources

State Film Production Incentives and Programs (National Conference of State Legislatures)

Do State Corporate Tax Incentives Create Jobs? Quasi-experimental Evidence from the Entertainment Industry (Price School of Public Policy, University of Southern California)

Multibillion-dollar tax breaks for movie production are getting bad reviews, and some states are walking out (CNBC)

Tax Breaks for Sale: Transferable Tax Credits Explained (Pew)

Reel Regret: The High Cost of Expanding Film Tax Credits in New Jersey (New Jersey Policy Perspective)