Texas is mulling whether to throw a bigger hat into the film and TV tax incentive ring.
A bill introduced in the state legislature proposes to supplement Texas’ existing grant program with a new, uncapped scheme targeted at big-budget projects of at least $15 million. Eligible productions would get a 30 percent base transferable tax credit that could reach as high as 42.5 percent, depending on the type of project and if it shoots in economically distressed areas. Notably, compensation for talent will qualify for incentives.
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The legislation introduced Tuesday is being considered as Texas’ neighboring states continue to see major money from Hollywood due to generous tax credit programs. In 2022, film and TV productions pumped more than $1.5 billion into the economies of New Mexico, Louisiana and Oklahoma. New Mexico alone saw a record $855 million. Now, Texas wants a larger piece of the action. The proposal, if passed, would launch the state into the upper tier of jurisdictions that offer film and TV tax credits, at least for mid-budget and blockbuster projects.
It appears that there’s more enthusiasm to augment the state’s film and TV tax incentive program on both sides of the aisle than in years past when there was strong resistance grounded in refusing to give tax breaks to productions creating content Texans may find objectionable. Rep. Four Price, an Amarillo Republican who authored the bill, says there’s “growing interest in content production” in the state.
“This is an industry we can do better,” he says. “There’s a lot of appetite here for film production in particular.”
Under the proposal, the tax credit starts at 30 percent of a production company’s in-state spending, not including wages. Twenty percent of wages for non-Texas residents and 35 percent of wages to Texas residents qualify.
At least 25 percent of a production’s crew must be from the state unless there’s proof they cannot be sourced locally.
On uplifts, there’s a 10 percent add-on for episodic TV series of three or more episodes with proof of distribution. There’s also a 2.5 percent bump if a production spends at least 25 percent of the project’s filming days in an economically distressed area on top of a 3 percent bump for post-production spending in the state.
A major component of the bill is that it will require no extra funding from the state and no appropriations request every two years. Unlike the current program, the new scheme will not show up on Texas’ books as spending but as a tax cut starting in fiscal year 2026. Productions will be issued a tax reduction certificate based on qualified cash spend that they can turn around and sell. The program will draw money from the state’s insurance and franchise tax buckets, estimated to be around $19 billion.
Under the existing grant program, Texas offers a maximum tax credit of 20 percent for projects with budgets of at least $3.5 million; 10 percent for projects with budgets between $1 million to $3.5 million; and 5 percent for projects with budgets between $250,000 to $1 million. There’s a 2.5 percent bonus for titles that shoot in economically distressed areas and a $1 million compensation cap. Additionally, at least 70 percent of the cast and crew must be Texas residents and at least 60 percent of the production’s shoot days must be in the state.
A major issue with the structure of the current program is underfunding. It’s allocated just $45 million annually. The coffers are typically drained by a handful of productions just months into every year. By having productions with budgets of at least $15 million apply for incentives through the add-on proposed in the bill, there will be more money to be spread out across smaller productions.
“With this, Texas will be a very competitive state in allowing big-budget projects to benefit from filming there while at the same time supporting local, smaller projects with the grant program,” says Joe Chianese, senior vp and practice leader at Entertainment Partners, a Los Angeles-based group that advises companies and state film offices on how to set up and structure tax incentive programs. He stresses that above-the-line, non-resident wages will qualify for tax breaks.
Since the birth of tax incentive programs for film and TV productions, Texas has seen studios leave for neighboring states even when projects are set in Texas. Oscar-winner Dallas Buyers Club mostly shot in Louisiana. Hell or High Water, written by Texas native Taylor Sheridan, filmed in New Mexico, as did B.J. Novak’s directorial debut Vengeance.
“It’s a bit frustrating to see dollars generated for those states when they could have easily been generated here at home,” Price says. “In the past, there was a perception that if we incentivize this, a lot of workers would move from the West Coast to Texas for the purposes of the production only, gobble up the incentive money and leave. Now, it’s understood that a lot of the work that goes on surrounding a production stays right here at home.”
Chris Debiec, CEO of the Texas Media Coalition — an organization created to write and pass the bill — says, “This is about bringing productions that should be shooting in Texas back to Texas.”
The perception on tax credits in the state is changing, at least in part due to Sheridan’s Yellowstone, which shot in North Texas. In February, Texas Lt. Gov. Dan Patrick said: “My goal is for Taylor to move all of his TV and movie production to Texas. Working together, I think we can get it done.” (Presumably this would include Sheridan’s 6666, an upcoming Paramount+ series set at a Texas cattle ranch.)
That same month, Mansfield officials approved a $70 million studio development project that will include soundstage clusters to host medium to large-scale productions.
Outside of the bill introduced last week, the Texas Media Production Alliance is pushing for an additional $200 million for the state’s existing grant program.
The Texas Film Commission and governor’s office didn’t respond to requests for comment.