Georgia Film Tax Credit: How It Works
Understand the process for securing and monetizing Georgia's film tax credit, covering key spending requirements and the state's verification process.
The Georgia Film Tax Credit is a financial incentive program designed to grow the state’s film and television industry. It provides a tax credit to production companies that film or conduct post-production activities in Georgia. The program allows eligible companies to reduce their state income tax liability, which lowers the overall cost of production.
Core Eligibility Requirements
To qualify for the Georgia Film Tax Credit, a production company must meet a minimum spending threshold of at least $500,000 in a single tax year on qualified expenditures. This can be met by a single project or by aggregating the costs of multiple projects from the same production company within that year.
The range of productions eligible for the credit is broad, covering media intended for commercial distribution outside of Georgia. Eligible projects include:
- Feature films
- Television series, pilots, and movies made for television
- Televised specials
- Commercials and music videos
- Qualified interactive entertainment projects, such as video games, which have a separate minimum spending threshold of $250,000
Certain productions are explicitly excluded from eligibility, including local news broadcasts, talk shows, and instructional videos. Productions of a pornographic nature are also ineligible. The primary determinant for eligibility is the project’s intent for multi-market commercial distribution.
Calculating the Credit Amount
The calculation of the Georgia Film Tax Credit begins with a base rate of 20 percent. This percentage is applied to the total amount of Qualified Georgia Production Expenditures (QGPEs) for a project certified by the Georgia Department of Economic Development (GDEcD).
Qualified expenditures are the core of the tax credit calculation and include costs directly associated with the production. These encompass salaries for both resident and non-resident workers, as well as payments for services and materials sourced from Georgia-based vendors. Examples of qualifying costs include equipment rentals, set construction materials, lodging, and payroll for cast and crew working in the state. Costs such as script acquisition, development fees, and marketing are not considered qualified expenditures.
Productions can increase their tax credit by an additional 10 percent through the Georgia Entertainment Promotion (GEP) uplift. To earn this bonus, a production must embed a state-provided Georgia promotional logo within the final product, bringing the potential total credit to 30 percent of qualified spending. For example, a production with $10 million in QGPEs would receive a base credit of $2 million, and if it qualifies for the GEP uplift, an additional $1 million, for a total tax credit of $3 million.
The Certification and Audit Process
After production activities are complete, the company must undergo a formal certification and audit process. This phase is managed by the Georgia Department of Revenue (GDOR), which verifies the qualified expenditures and issues the final tax credit amount.
A mandatory audit of the production’s spending is required for all projects seeking the credit. The production company can have the audit performed by the GDOR or by an approved independent accounting firm, and the company is responsible for the associated costs.
The auditor examines the production’s financial records to verify that claimed expenditures meet the state’s definition of QGPEs. This involves reviewing invoices, contracts, and payroll records to confirm costs were incurred in Georgia for the certified production. Upon completion and approval of the audit, the GDOR issues a final certification letter specifying the exact amount of the earned tax credit.
Monetizing the Tax Credit
Once a production company receives its final certification letter from the Georgia Department of Revenue, it has several options to monetize the earned tax credit. The most direct method is to use the credit to offset its own Georgia corporate income tax liability. If the company owes state taxes, the credit can be applied to reduce or eliminate that obligation, providing a dollar-for-dollar reduction of its tax bill.
A key feature of the Georgia Film Tax Credit is its transferability. If a production company has little or no Georgia tax liability, or if the credit amount exceeds its liability, it can sell the tax credit to another Georgia taxpayer. This includes individuals and corporations who can then use the purchased credit to lower their own state tax obligations, creating a secondary market for the credits.
The sale of tax credits is often facilitated by specialized tax credit brokers who connect production companies with Georgia taxpayers. The credits are sold at a discount, with market rates ranging from 85 to 92 cents on the dollar. This transaction is documented with the GDOR and allows production companies to convert their tax credits into working capital.