What’s New

Increase in the amount of Film Production Tax Credits that can be applied against taxes owed under Chapter 219 (Sales and Use Taxes)

Legislation expands the limitation on the amount of credit an eligible taxpayer is allowed to claim against taxes from 78% to 92% for the income years commencing on or after January 1, 2024, but prior to January 1, 2026. This legislation is effective January 1, 2024.

Description and Applicable Taxes

A Film Production tax credit is available to any eligible production company which produces a qualified production and incurs qualified production expenses or costs. This tax credit is administered by the Connecticut Department of Economic and Community Development (DECD).

A company is eligible for this tax credit if it:

• Conducts at least 50% of principal photography days within the state;
• Expends at least 50% of postproduction costs within the state; or
• Expends $1 million or more in postproduction costs in this state.

Only production expenses or costs incurred in Connecticut qualify for this tax credit. This tax credit may be applied against the taxes imposed under Chapter 207 (Insurance Companies and Health Care Centers Taxes), Chapter 208 (Corporation Business Tax), and Chapter 211 (Community Antenna Television Systems and One‑Way Satellite Transmission Businesses Tax). For income years commencing on or after January 1, 2022, the credit may also be applied against the tax imposed under Chapter 219 (Sales and Use Tax).

This credit may be assigned.

Definitions

Eligible production company means a corporation, partnership, limited liability company, or other business entity that is engaged in the business of producing qualified productions on a one-time or ongoing basis and is qualified by the Secretary of the State to engage in business in Connecticut.

Qualified production means entertainment content created in whole or in part within the state, including motion pictures; documentaries; long-form, specials, mini-series, series, sound recordings, videos and music videos and interstitials television programming; interactive television; relocated television production; interactive games; videogames; commercials; any format of digital media, including an interactive web site, created for distribution or exhibition to the general public; and any trailer, pilot, video teaser or demo created primarily to stimulate the sale, marketing, promotion or exploitation of future investment in either a product or a qualified production via any means and media in any digital media format, film or videotape, provided such program meets all the underlying criteria of a qualified production.

Production expenses or costs mean those qualifying expenditures that are clearly and demonstrably incurred in the state in the preproduction, production, or postproduction cost of a qualified production.

Tax Credit Amount

The tax credit is equal to:

• 10% for production expenses or costs of $100,000 to $500,000;
• 15% for production expenses or costs of more than $500,000 to $1 million; and
• 30% for production expenses or costs of more than $1 million.

Carryforward and Carryback Limitations

For vouchers issued on or after July 1, 2015, a taxpayer may claim all or part of the tax credit in the income year the expenses or costs were incurred or in the next five income years.  

How to Apply

• An eligible production company must submit an eligibility application to DECD on an annual basis, but no later than 90 days following a qualified production’s first eligible expenditure.
• An eligible production company may apply for an interim tax credit voucher no earlier than 90 days after the filing of the eligible application.
• An eligible production company must file a final tax credit voucher application within 90 days of the end of the company’s annual fiscal period or 90 days of the last qualified production expense.
• An eligible production company must pay the administrative fee charged by DECD for reviewing the application.
• In general, tax credit vouchers may only be issued for motion pictures that were designated as state-certified qualified productions prior to July 1, 2013.  However, a tax credit voucher may be issued for a motion picture that has twenty-five per cent or more of the principal photography shooting days in this state at a facility that receives at least twenty-five million dollars in private investment and opens for business on or after July 1, 2013.

Visit DECD’s website at www.ctfilm.com for complete details regarding the application process.

DECD will enter the amount of the production company’s tax credit on a tax voucher. There shall be independent certification by a licensed Connecticut Certified Public Accountant approved by DECD of the production expenses or costs incurred during the period for which such voucher is issued.

Assignment and Transfer

Any tax credit allowed may be sold, assigned, or otherwise transferred, in whole or in part, to one or more taxpayers, provided no tax credit, after issuance, may be sold, assigned, or otherwise transferred, in whole or in part, more than three times. In the event of an assignment, the transferor and the transferee shall jointly submit written notice of such transfer to DECD not later than 30 days after such transfer. The notification after each transfer shall include the tax credit voucher number, the date of transfer, the amount of such tax credit transferred, the tax credit balance before and after the transfer, the tax identification numbers for both the transferor and transferee, and such other information as DECD may require.

An entity that is not subject to tax under Chapter 207 (Insurance/Health Care Center) or Chapter 208 (Corporation Business Tax) of the Connecticut General Statutes may not assign, in any one income year, more than 25% of its tax credit. These assignment limitations do not apply if:

• The entity owns, directly or indirectly, 50% or more of an entity subject to the business entity tax under Chapter 213a of the Connecticut General Statutes, or
• The qualified production giving rise to the credit was filmed at a qualified production facility that: 1) is located in Connecticut; 2) is intended for film, television, or digital media production; and 3) has had an investment of $3 million, or less if DECD determines the facility otherwise qualifies.

Insurance Companies and Health Care Centers: In addition to the assignments that are permitted under the specific provisions of this tax credit statute, this credit may also be assigned by an insurance company or health care center to an affiliate provided that the affiliate may only apply the assigned credit against its tax liability under Chapter 207 (Insurance Companies and Health Care Centers Taxes).

Limitations on Assigned Credit Use against the Community Antenna Television Systems Tax

For income years commencing on or after January 1, 2019, assigned credits may be assigned to and used by any taxpayer subject to the Community Antenna Television Systems Tax (CATV Tax).   In general, taxpayers assigned the credit may only claim 95% of the amount of such credit against the CATV Tax; the remainder is forfeited.  However, if there is common ownership of at least 50% between the eligible production company and the taxpayer assigned the credit, the taxpayer assigned the credit may only claim 92% of the amount of such credit against the CATV Tax; the remainder is forfeited.

Limitations on Assigned Credit Use against the Sales and Use Tax

For income years commencing on or after January 1, 2022, assigned credits may only be claimed against the tax imposed under Chapter 219 (sales and use tax) if there is common ownership of at least 50% between the eligible production company and the taxpayer assigned the credit. For income years beginning on or after January 1, 2024, but prior to January 1, 2026, taxpayers claiming the credit against the tax imposed under Chapter 219 (sales and use tax) may only claim 92% of the amount of such credit against such tax; the remainder is forfeited.

How to Claim the Tax Credit

Complete Form CT-1120 FP, Film Production Tax Credit, and attach it to Form CT-1120K, Business Tax Credit Summary, and/or Form CT-207K, Insurance/Health Care Tax Credit Schedule. The tax credit amount that may be claimed is the amount listed on the tax credit voucher.

If claiming the credit against the tax imposed under Chapter 219 (sales and use tax), complete Form OS-114, Connecticut Sales and Use Tax Return, on myconneCT.

Where to Get Additional Information

Direct inquiries to:

Connecticut Department of Economic and Community Development
Office of Film, Television, and Digital Media
450 Columbus Boulevard
Hartford CT 06103
860-270-8211

www.ctfilm.com

Statutory and Regulatory References

Conn. Gen. Stat. §12-217jj; Conn. Agencies Regs. §§ 12-217jj-1 through 12-217jj-13.

Last updated February 6, 2024