New JerseyS3275220th Legislature (2024-2025)SenateWALLET

Revises various provisions of film and digital media content production tax credit program.*

Sponsored By: Margie Donlon M.D. (Democratic), Vin Gopal (Democratic), John F. McKeon (Democratic), Eliana Pintor Marin (Democratic), Benjie E. Wimberly (Democratic)

Signed by Governor

Personalized for You

How does this bill affect your finances?

Personalize government policy and PRIA will tell you what this bill means for your household, plus every other piece of legislation we track. PRIA reads each provision against your financial profile to show you exactly what matters to your wallet.

Free to download

Bill Overview

Analyzed Economic Effects

19 provisions identified: 2 benefits, 3 costs, 14 mixed.

Development funds support more film credits

The law makes uncommitted Aspire and Emerge credit capacity available for film production. Fiscal years 2023 and 2024 each include $250 million for studio partners and $250 million for film-lease companies. Fiscal year 2025 includes those same amounts, plus $300 million for other production taxpayers. Beginning in fiscal year 2023, the authority can authorize additional annual amounts up to $400 million for studio partners and $250 million for film-lease companies, using available funds within overall program limits. Awards require agreements spelling out company obligations and consequences for default.

Business incentives face nine-year spending limits

The law caps covered New Jersey business credits at $11.5 billion over nine years, reserving $2.5 billion for transformative Aspire projects. Each transformative project is capped at $400 million. For each of the first six years, annual caps are $50 million each for historic properties and brownfields, $60 million for Innovation Evergreen, and $40 million for Food Desert Relief. Innovation Evergreen also has a $300 million nine-year cap. Community-Anchored Development and Cultural Arts share a $1.2 billion nine-year cap; Community-Anchored eligibility starts January 1, 2026, with annual regional limits of $130 million north and $70 million south. Non-transformative Aspire and Emerge credits share a $1.1 billion annual cap for the first six years. Uncommitted amounts can shift to eligible offshore wind, film, and other credit uses. Beginning in fiscal year 2024, the board can shift up to $500 million yearly into transformative projects when their remaining credit capacity falls below $1 billion and the board finds a transfer warranted. Those transfers have regional ceilings of 65% north and 35% south. The board can approve up to $200 million above an annual cap based on demand and economic needs, but uncommitted balances cannot be deployed after nine years.

Production credit pools grow within caps

Annual base film-credit caps are $100 million for other taxpayers and, for each designated partner category, $100 million in fiscal years 2021–2023. Each partner category's base cap rises to $150 million for fiscal years 2024–2039. Digital media has a $30 million annual base cap from fiscal year 2019 through fiscal year 2039. Beginning July 1, 2024, the authority can authorize up to $100 million more annually for the digital-media pool serving taxpayers outside the two partner categories, using available funds. Certified unused capacity and approved credits that cannot be redeemed or transferred increase later-year limits; otherwise eligible applicants blocked only by a full pool receive approval in the first later fiscal year with room.

Hiring plans earn extra production credits

Approved diversity plans qualify film producers for a 2% credit and digital-media producers for a 4% credit on qualified expenses. The film rate rises to 4% when the plan includes specified performer-hiring goals for women or minority performers, 12-month New Jersey residents, and performers' union members. Applications must also say whether producers intend to join specified training, education, and recruitment programs. These credits cover tax years beginning July 1, 2018, through June 30, 2039, and require state approval of the application and plan.

Noncompliant studios risk losing tax credits

The authority can recover credits that studio partners or film-lease companies received only because of their designation when they fail qualification or compliance requirements. Studio partners can also lose their designation. The law also specifies mandatory recovery of the studio-status portion in its termination provision. Initial film approval ends under that provision when the authority has not approved final documents; recovery is tied to the designation-based credit, not a fixed dollar penalty.

Digital credits cover defined production costs

Eligible digital content includes animation, games, visual effects, interactive media, text, images, sound, and video. Listed user-generated, local-news, public-service, e-commerce, obscene, private-purpose, and acquired or licensed content is excluded. Eligible New Jersey costs include production labor, software, hardware, editing, equipment rental, and post-production, but not advertising, unrelated expenses, acquired content, or duplicated claims. Applications covered by the 2024 law also exclude website design, maintenance, and hosting; contractor payments need a New Jersey work connection and required withholding. For employee-count tests, full-time workers generally work at least 35 hours weekly and meet tax-status requirements; qualifying working partners count, but contractors and consultants do not.

Digital producers get tiered tax credits

Approved digital producers generally get a 30% credit for tax years beginning July 1, 2018, through June 30, 2039. Qualifying vendor expenses in Atlantic, Burlington, Camden, Cape May, Cumberland, Gloucester, Mercer, and Salem counties receive 35%. Eligible post-production receives 40% at a film-lease facility or through a studio partner, or 35% through a qualified independent post-production company. The general credit requires $2 million in New Jersey vendor expenses and at least half of qualified expenses in New Jersey full-time employee wages; after the 2024 law took effect, those wages no longer count toward the $2 million test. Post-production credits require at least $500,000 in eligible expenses, and applicants need independent accountant verification and required withholding.

Film businesses face expense eligibility limits

Film credits exclude advertising and story, script, and scenario costs; eligible contractor payments require New Jersey work and withholding. Production payers must withhold 6.37% on covered payments to staffing companies, independent contractors, and homeowners renting personal homes for filming. For applications submitted after the 2018 law took effect, with no credit allowed before the 2021 law took effect, services count only where workers were physically in New Jersey. Rental property must be used in New Jersey and come from an authorized vendor; purchased property generally needs an authorized vendor and New Jersey delivery or acquisition. Multi-state productions can also count the New Jersey-use share of property acquired and delivered in either production jurisdiction.

Film businesses get location-based tax credits

Approved studio partners and film-lease companies get a 40% film credit; other production taxpayers get 35%. For qualifying expenses within 30 miles of Columbus Circle, those rates fall to 35% and 30%. The credit covers tax years beginning July 1, 2018, through June 30, 2039. Productions must spend at least 60% through New Jersey vendors, excluding post-production, or exceed $1 million in qualifying in-state vendor expenses; reality shows must meet both tests. Main filming must start within 180 days after the original application, and productions need independent accountant verification, required withholding, and required New Jersey promotional credits.

Film-lease companies face facility use tests

Film-lease companies must occupy a qualifying partner facility and shoot at least half of a project's main filming days in New Jersey. At an occupancy-approved facility, they must also spend at least 50% of filming days there or incur at least 33% of qualified project expenses there. Before occupancy approval, a separate route requires a three-year lease covering at least 36,000 square feet of soundstage space and a production-services contract. Partner facilities generally need at least 250,000 square feet, and only three can be designated, except qualifying studio-partner facilities. Outside that exception, owners or developers must accept possible authority equity investment on commercially reasonable terms.

More productions and businesses qualify

Eligible films include qualifying television shows lasting at least 22 minutes for national or regional audiences. Certain live-audience programs and events at state-funded nonprofit arts venues also qualify, while listed news, sports, and obscene productions remain excluded. Reality shows need at least six ordered episodes and a commissioned, scheduled premiere on a major network or streaming service. Certain businesses that do not themselves pay New Jersey gross income tax can apply and allocate credits to eligible taxpayers. Qualifying corporation-owned partnerships and wholly owned single-member companies also have an application route through the program's July 1, 2039 cutoff.

Production credits remain usable and sellable

Businesses can sell or assign approved film and digital-media credits to taxpayers with New Jersey business or gross-income tax liability. Buyers must pay at least 75 cents per dollar of transferred credit. Transfers require state approval, keep the original credit limits, and end the seller's right to claim the transferred amount. Businesses unable to use an allowed credit because of legal limits can carry it into the next seven tax years.

Studio status requires major facility commitments

Studio-partner status gives qualifying production companies access to designated-partner credits, but no more than three companies can hold that status. Companies must commit to New Jersey productions and develop, buy, or sign a 10-year lease for at least 250,000 square feet. A qualifying purchase contract provides another route if signed within 48 months after designation. The authority board can extend that deadline by up to 12 months.

Studios get larger eligible pay allowances

Eligible pay per highly compensated person is generally capped at $750,000, or $500,000 for studio partners and film-lease companies. Studio partners can add eligible creative-worker pay up to $18 million when New Jersey spending is below $25 million, or $72 million at or above that threshold. Film-lease companies can add up to $15 million below $50 million in New Jersey spending, or $60 million at or above it. These allowances cover writers, directors, producers, and performers, but exclude background actors without scripted lines. Studio partners can also count deferred pay as production-time expenses by filing a supplemental independent accountant's report within two years after production ends, subject to available credits and authority review.

Production tax credits require independent checks

Film and digital media credit claimants must submit an independent New Jersey-licensed certified public accountant's report after production ends. The report must follow procedures set by the authority and state tax director. They review expense and wage samples and adjust claims for identified errors. Projected errors from random samples also apply when they exceed 1% of the total items or wages reviewed. Claimants must include the resulting written determination with their tax return.

Studio partners face occupancy and repayment rules

Studio partners' award agreements must require them to occupy the facility used to qualify for their designation throughout the commitment period. For developed or purchased facilities, that period ends 10 years after the temporary certificate of occupancy is issued. For leased facilities, it ends 10 years after the relevant lease period begins. The authority must recover designation-only credits when a partner fails occupancy or other designation requirements. Films with initial approval but no approved final documents lose their approvals.

Film facilities gain limited partner status

New Jersey allows up to three film-lease partner facilities, with an exception for facilities connected to designated studio partners. Facilities must meet the applicable 250,000-square-foot requirement and include a sound stage and production support space. A commitment of at least five successive years must be backed by site plan approval or a signed redevelopment agreement. Most owners or developers must accept the authority taking an ownership stake on commercially reasonable terms. Leasing at least 250,000 square feet for at least 10 years provides a path to studio partner status, subject to the remaining designation requirements.

New rules for production staffing companies

Production businesses can count qualifying payments to loan-out companies that supply workers performing services in New Jersey. This includes workers whose wages face withholding but are exempt from New Jersey income tax under a state reciprocity agreement. For applications submitted on or after the 2024 law's effective date, loan-out companies must be authorized to do business in New Jersey. Companies supplying goods or support services, such as catering, construction, equipment, or transportation, are excluded from this loan-out definition.

Production payments face 6.37% tax withholding

Production taxpayers must withhold 6.37% from covered payments to loan-out companies, independent contractors, and homeowners paid for filming at home. They must send this money to New Jersey as income tax withholding, not an added final tax. Payers take on employer withholding duties. A loan-out company that reports employee payments is relieved of those duties for payments already covered by the payer's withholding. Payments for New Jersey services by loan-out employees exempt under a tax reciprocity agreement count as production expenses when the specified withholding applies.

Sponsors & Cosponsors

Cosponsors

Hall, Garnet R.
Affiliation unavailable
Gordon M. Johnson
Democratic • Senate
Angela V. McKnight
Democratic • Senate
Cody D. Miller
Democratic • House
Paul D. Moriarty
Democratic • Senate
Raj Mukherji
Democratic • Senate
Carol A. Murphy
Democratic • House
Ellen J. Park
Democratic • House
Verlina Reynolds-Jackson
Democratic • House
Shanique Speight
Democratic • House

Roll Call Votes

All Roll Calls

Yes: 105 • No: 7

House vote • 6/28/2024

3RDG FINAL PASSAGE

Yes: 71 • No: 3

Senate vote • 6/28/2024