New JerseyS4618220th Legislature (2024-2025)SenateWALLET

Modifies certain requirements and award availability under film and digital media content production tax credit program.

Sponsored By: Margie Donlon M.D. (Democratic), Vin Gopal (Democratic), Raj Mukherji (Democratic), Luanne M. Peterpaul Esq. (Democratic), Eliana Pintor Marin (Democratic)

Signed by Governor

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Bill Overview

Analyzed Economic Effects

21 provisions identified: 13 benefits, 1 costs, 7 mixed.

Film producers get location-based tax credits

Approved film producers get credits against New Jersey business or gross income taxes for periods starting July 1, 2018–June 30, 2049. Rates are 40% for studio partners and film-lease production companies, and 35% for others. Within the specified 30-mile New York City radius, those rates are 40%, 35%, and 30%, respectively. Productions must spend at least 60% of total costs, excluding post-production, through authorized New Jersey vendors, or exceed $1 million in qualifying vendor costs. Filming must begin within 180 days after the original application; state approval, promotional materials, accountant reports, and withholding requirements apply.

Higher credits for targeted digital production

Digital media producers receive a 35% credit for qualifying services or property bought through vendors primarily based in eight counties. Those counties are Atlantic, Burlington, Camden, Cape May, Cumberland, Gloucester, Mercer, and Salem. New Jersey studio partners and film-lease post-production companies receive a 40% credit for specified post-production costs totaling at least $500,000. These costs include visual effects services performed at a New Jersey film-lease partner facility. The 40% credit also requires an independent accountant's verification report and compliance with applicable tax withholding requirements.

Larger credit pools for film companies

Studio partners and film-lease production companies each have a $150 million annual film credit limit for fiscal years 2024–2049. Each category's limit was $100 million in fiscal years 2021–2023; other taxpayers have a $100 million annual limit. Starting in fiscal year 2023, the state development authority can add $400 million annually for studio partners and $250 million for film-lease companies. These extra amounts are discretionary and depend on available funds. Studio and film-lease awards require agreements; a studio's change to film-lease partner facility status triggers formula-based changes to category limits. Unused amounts and certain unusable prior awards can increase later limits under certification and allocation rules. Eligible applications delayed by exhausted limits can receive approval in a later year when credits are available.

More credit funding for digital producers

Digital media production credits have a $30 million annual limit through fiscal year 2049. Beginning July 1, 2024, the state development authority can add up to $100 million each fiscal year from specified funds. This extra amount excludes New Jersey studio partners and film-lease production companies. It is discretionary and depends on available funds. Unused amounts and certain previously approved credits that cannot be redeemed or transferred can raise the next year's limit after annual certification.

Producers can count more high-paid talent

Studio partners and film-lease producers can count specified talent pay above the general $750,000-per-person exclusion. Studio partners can add up to $18 million below $25 million in qualified in-state expenses, or $72 million at or above that threshold, including the added amount. Film-lease producers can add up to $15 million below $50 million in qualified in-state expenses, or $60 million at or above it. A separate studio-partner feature-film category requires at least $125 million in qualified in-state expenses. Eligible roles include writers, directors, music directors, producers, and performers; background actors without scripted lines do not qualify for this added allowance.

State buys qualifying unused studio credits

The state must buy qualifying unused credits for 95 cents per dollar of credit value. Original applications must be approved on or after January 1, 2026; certificates must originate with studio partners and be at least one year old. Annual purchase caps are $80 million in fiscal 2026, $160 million in 2027, $240 million in 2028, and $200 million thereafter. Requests above a year’s cap carry into the next year, subject to its cap. Purchases require full constitutional school funding, full required state retirement contributions, and a budget surplus of at least 12% of General Fund and Property Tax Relief Fund appropriations.

Unused film credit capacity rolls forward

The authority must certify unused annual film-credit capacity and approved credits that cannot be redeemed or transferred. Those amounts increase the relevant category’s award limit for the next fiscal year. Beginning in fiscal 2028, up to $100 million in unused capacity for other taxpayers can instead increase the following year’s studio-partner limit, subject to the law’s funding-source requirements.

Film payments carry 6.37% tax withholding

Payers must withhold 6.37% from covered production payments to loan-out companies, independent contractors, and homeowners renting residences for filming. Recipients get less cash upfront, but the withheld amount counts toward New Jersey income taxes, not an added tax. Payers take on employer withholding duties, and loan-out withholding is allocated to employee accounts based on New Jersey wages. Loan-out companies that report the specified employee payments are relieved of employer duties for those payments that tax year.

Digital producers get credits with spending limits

Approved digital media producers get a 30% credit for tax periods starting July 1, 2018–June 30, 2049. The rate is 35% for eligible vendors based in Atlantic, Burlington, Camden, Cape May, Cumberland, Gloucester, Mercer, or Salem counties. The general credit requires $2 million in authorized New Jersey vendor spending and at least 50% of eligible costs in New Jersey employee pay; full-time equivalent means 35 hours weekly. For applications submitted after P.L.2024, c.33 took effect, qualifying full-time digital employee pay cannot satisfy the $2 million threshold. Eligible post-production spending of at least $500,000 gets 40% through designated studio or film-lease providers, or 35% through qualified post-production companies.

Film-lease credits require space and filming

Film-lease production companies gain credit access but must shoot at least 50% of principal photography days in New Jersey. At a certified facility, they must shoot at least 50% of days there or meet a 33% facility-cost test. Before occupancy certification, leases require three years, 36,000 square feet of soundstage space, and a qualifying production-services contract; violations can trigger credit recovery. Film-lease partner facilities generally need 250,000 square feet for five years, while studio partners using them need a 10-year lease of that size. Facility designations are capped at three, with a studio-partner exception; applicable owners must accept possible state equity investment on commercially reasonable terms.

Studio credits require long facility commitments

Up to three companies can become studio partners by committing to New Jersey production and developing, buying, or leasing a facility of at least 250,000 square feet. A qualifying government purchase contract must be executed within 48 months after designation, with a possible 12-month extension. Award agreements require at least 10 years of occupancy, starting with a temporary occupancy certificate or the lease term. Failure can cost the designation-based credit and reduce pending awards, but occupancy failures outside the partner’s control receive protection. Credit recovery reaches only the original recipient, not certificate buyers or assignees.

Film producers keep access to delayed credits

Eligible film and digital media applicants denied only because annual credits ran out keep their place in line. Applications must be approved, in application order, in the first later fiscal year when credits are available. They must still meet all other program requirements.

More productions and businesses qualify

Reality shows qualify with at least four episodes ordered, commissioned, and scheduled to premiere by a major network or streaming service. Studio partners can also claim relocated, ongoing news or current-events shows at their designated facilities, including sports-themed shows, but not sports events. Corporate-owned partnerships and wholly corporate-owned single-member limited liability companies can qualify for film credits without paying corporation business tax themselves. Those single-member companies must be formed or registered in New Jersey. Entities that do not pay gross income tax can apply for film or digital credits and pass allowed credits to eligible owners.

Producers can count more production costs

Qualifying studio partners and film-lease producers with three-year partner-facility leases can count specified insurance premiums, producer fees, and rights fees. Those costs are allocated by New Jersey shoot days and together capped at 7.5% of qualified film expenses. For original applications approved beginning January 1, 2028, qualifying script costs also count. New Jersey-written scripts count in full; scripts written elsewhere count in proportion to New Jersey shoot days. Script claims require a three-year partner-facility lease and at least two writer-development, writers’ room, residency, research, or approved alternative criteria, certified by an independent New Jersey-licensed accountant.

Producers can sell their tax credits

Approved producers can request transfer certificates instead of using credits against their own tax bills. Eligible buyers must pay at least 75 cents for each dollar of credit. Sellers give up their right to claim the transferred amount. Buyers remain subject to the credit’s use limits and deadlines.

Producers get 35% post-production tax credit

Eligible digital media producers get a 35% tax credit for qualifying post-production costs, with at least $500,000 in qualifying expenses required. Visual effects must be performed by a qualified post-production company. Qualifying work by a business that the post-production company owns at least 51% may also count. An independent certified public accountant must verify expenses, and applicable tax withholding requirements apply.

Studio partners can claim deferred pay

Studio partners can count deferred production pay, including advances, as film expenses when credits remain available and the authority approves. An independent accountant’s supplemental report is due within four years after production ends. Qualifying payments made directly to a bona fide labor union count even without New Jersey income-tax withholding. Film and digital claims can also include qualifying New Jersey work through loan-out companies when employee wages are subject to withholding but exempt under a state tax reciprocity agreement.

Producers face tighter eligible-cost rules

Digital credits exclude marketing, advertising, content acquisition or licensing, and costs unrelated to production. Applications submitted after P.L.2024, c.33 took effect also exclude website design, maintenance, and hosting. Contractor and loan-out payments count only for New Jersey work or services with required withholding. For applications submitted on or after that earlier law’s effective date, loan-out companies must be authorized in New Jersey; goods and ancillary-service providers are outside that definition. Film-location payments to homeowners count under the homeowner rule only with withholding and when the homeowner is not an authorized New Jersey business vendor.

Post-production firms gain credits with safeguards

Qualifying film-lease post-production companies can count digital media work, including visual effects, toward tax credits. Work by another business qualifies only when the applicant owns at least 51% of that business. Applicants must commit to space at a film-lease partner facility. Without an occupancy certificate, they need a lease of at least three years covering 36,000 square feet. Violations can trigger recovery of designation-based credits, subject to a one-year hold and a possible one-year construction extension.

Producers earn hiring and promotion bonuses

For tax periods starting July 1, 2018–June 30, 2049, producers can earn a 4% hiring credit. Approved plans must target residents of specified disadvantaged areas, distressed municipalities, or federally owned land, with verified success or good-faith efforts. For periods starting July 1, 2025–June 30, 2049, studio partners and film-lease producers can earn another 4% credit. That bonus requires an approved New Jersey promotion or investment plan meeting at least four statutory criteria. For those later periods, hiring and promotion bonuses together are capped at 5% of qualified film expenses per taxpayer, and combined program credits cannot exceed 45% of eligible film or digital expenses.

Producers face claim checks and limits

Producers cannot use the same costs for this credit and another tax break or business incentive covering the same period. Credits cannot reduce corporation business tax below its legal minimum, but unused amounts carry forward for seven following tax periods. Independent New Jersey-licensed accountant verification and state review support credit claims. The authority must adjust expense errors and project sampled errors across a category when discrepancies exceed 1% of the reviewed total. Its written determination must accompany a return claiming the credit.

Sponsors & Cosponsors

Cosponsors

Angela V. McKnight
Democratic • Senate

Roll Call Votes

All Roll Calls

Yes: 93 • No: 20

House vote • 6/30/2025

3RDG FINAL PASSAGE

Yes: 63 • No: 16 • Other: 1

Senate vote • 6/30/2025