Information for Independent Filmmakers
It's not lighting the set, it's not getting the leading lady out of the makeup trailer, it's not locking the sound track - - - - - -
it's raising the money
---that is the hardest part of making an independent film.
Montana's new tax incentives, coupled with the federal incentives that were passed in The American Jobs Creation Act of 2004, provide the independent producer with an excellent tool for convincing investors that financing a film may be a logical and sound investment.
Montana Tax Incentive no longer has a cap
- 14% tax credit for hiring Montana residents (talent and crew)
- 9% tax credit for goods and services purchased in Montana
- Montana has NO sales tax
Federal Tax Credit (IRC sections 181 and 199)
- Allows a 100% write-off of the costs of the film (or television) production in the year that the cost is incurred. No more multi-year amortization or depreciation! The film must have a budget of at least $1 million, but not more than $15 million, and spend a minimum of their total "qualified compensation" on work performed in the United States. If the film is produced in a "depressed area" or community, the cap rises to $20 million. Over 90% of Montana Qualifies for the $20 million cap.
- An income tax deduction is available under Section 199 as income is generated from exploiting the film. (Limitations apply.)
- Films shot in Canada do not qualify for favorable tax treatment under IRC sec. 181 or sec. 199, and must report expenses and pay taxes under the income forecast method or the 15 year straight line amortization method.
A properly set up film production company will pass these tax incentives through to the investors, reducing investor risk and enhancing the possibility of financing for the producer. A professional tax advice company has reviewed the Montana and Federal tax incentives and concluded that, all things being equal, an investor will realize a superior rate of return on a film shot in Montana over a film shot in Canada if the budget is $20 million or less.