Texas Film Tax Credit: How to Qualify and Apply

The Texas Moving Image Industry Incentive Program (TMIIIP) is a state-sponsored initiative designed to attract media production to Texas. Administered by the Texas Film Commission, the program offers a financial rebate to qualified productions, reducing the cost of filming in the state. This incentive is a cash grant, not a traditional tax credit, and its goal is to encourage the use of Texas locations, services, and local workforce.

The program is available for feature films, television programs, commercials, video games, animation, and visual effects. It provides grants to companies that produce their projects in Texas.

Project and Applicant Eligibility

To qualify for the TMIIIP, a project must fall into an eligible category, which includes feature films, television series, commercials, and video games. The program is open to various legal entities that undertake these productions. The content of the project is also a factor in eligibility, as productions are required to adhere to guidelines that restrict “inappropriate content” or content that portrays Texas in a negative light.

Beyond the project type, the production itself must have a significant Texas presence. At least 60% of the total production days must occur within the state. The Texas Film Commission reviews applications to confirm that both the project format and its content align with the program’s statutory requirements before it can be considered for the grant.

Financial and Spending Requirements

A production must meet specific in-state spending minimums to be eligible for an incentive grant. For feature films, television programs, and commercials, the minimum spending threshold in Texas is $250,000. For video games, the minimum in-state spend is $100,000.

In addition to financial benchmarks, the program mandates specific hiring practices centered on the local workforce. A production is required to employ Texas residents for at least 55% of its paid crew positions and 55% of its paid cast members, including extras. Verification of residency is a formal part of the process, requiring individuals to complete a Declaration of Texas Residency form.

Calculating the Tax Credit Value

The TMIIIP provides a cash grant based on a percentage of a project’s qualified Texas expenditures. The base incentive is structured in tiers based on the total amount of in-state spending. The grant starts at 5% for spending between $250,000 and $1 million, increases to 10% for spending between $1 million and $3.5 million, and reaches 20% for spending over $3.5 million.

Qualified Texas Production Expenditures (QTPE) form the basis of the grant calculation. These include eligible costs for pre-production, production, and post-production incurred in Texas. Examples of qualifying expenses are wages paid to Texas residents, payments to Texas-based vendors for goods and services, and costs for lodging.

An additional incentive is available for productions that film in specific areas of the state. A bonus of 2.5% can be added to the grant value if at least 25% of the production is filmed in underutilized or historically underrepresented counties designated by the Texas Film Commission.

Required Information and Documentation for Application

Before initiating a formal application, production companies must gather a comprehensive set of documents. All this information is compiled to complete the main application form provided by the Texas Film Commission. Required documentation includes:

• The final script for a film or television show, or a detailed outline for other project types like video games.
• A detailed budget specifically outlining the anticipated Texas expenditures that will be used to calculate the potential grant amount.
• A complete financing plan that demonstrates the project is fully funded.
• Lists of key personnel and vendors, with an emphasis on those based in Texas.

The Application and Verification Process

The application process is conducted in two distinct parts. Part 1 of the application must be submitted to the Texas Film Commission before any production work begins. This initial submission, which includes the detailed budget and script, must be filed online no earlier than 180 days and no later than 5:00 PM Central Time five business days before the start of principal photography. Late submissions are not accepted.

After production is complete and all costs have been incurred, the applicant submits Part 2 of the application. This second part includes the final accounting of all qualified Texas expenditures. The Texas Comptroller of Public Accounts then conducts a thorough review or audit of the submitted expenses to verify their eligibility under program rules.

Upon successful completion of the audit and final approval from the Comptroller’s office, the cash grant is issued to the production company.