GCFC FAQ: How does the tax incentive work?

In 2009, GCFC President Ivan Schwarz wrote and worked to pass the Ohio Motion Picture Tax Incentive, which has been the driver of much of our success in building Northeast Ohio’s media production industry.

But how does it work?

35 states, including Ohio, have enacted a film tax incentive in some form over the last 20 years. It has become the business standard in the film and television industry that a project will not shoot in a state without an incentive, with very few exceptions. State incentives have become an important way to not only guard the bottom line for film studios, but also build a new industry and bring production jobs and new businesses to areas where they haven’t existed before.

When a production wishes to shoot in Ohio, they submit an application and a budget to the state film office. The incentive is first come, first served so if there is money left when it is the production’s turn in line, and everything with their application checks out, then they will be awarded a letter from the state guaranteeing their tax credit.

Our tax incentive grants productions a 30% refundable credit on all money spent in Ohio, above and below the line. This means that when the production is over, they will have a CPA audit their budget against the one they submitted with their application. If everything checks out, the state sends them a check for the amount guaranteed in the letter (or less if they came in under budget).

Our incentive renews annually on July 1st, and is currently capped at $40 million a year. There is no per project cap, and a production must spend at least $300,000 in Ohio to qualify.

According to the most recent economic impact study by Cleveland State University in 2015, the incentive is responsible for over $400 million in economic impact and has created the equivalent of 1,700 full-time jobs. Also, for every dollar that the state spends on the credit, Ohio’s economy sees a return of $2.01.

This is great, but we know we can do better. We want to raise the incentive to at least $80 million annually, which will bring more productions, more businesses and more jobs to Northeast Ohio. It will create greater need for support services like equipment rental houses and payroll companies, not to mention all the other local businesses like lumber yards, dry cleaners, hotels, caterers and more.

Most importantly, an increase in the incentive will mean more permanent industry infrastructure like soundstages, production offices, and post-production houses so that we can truly have a year-round industry and cater to the needs of any production imaginable.

We’re working hard every day to improve our incentive and keep growing this industry into what we know it can be.

At the end of the day, it’s all about bringing jobs and people to Cleveland.