New Mexico Film Industry Tax Incentives: A Comprehensive Guide for Filmmakers

Written By Sebastian Sauerborn

New Mexico's film industry has experienced significant growth in recent years, largely due to the state's attractive tax incentives for film production. These incentives have prompted a surge in both large-scale Hollywood productions and independent films choosing to shoot within the state's borders. These tax breaks serve as a motivating factor for filmmakers, ultimately contributing to an increased economic impact and encouraging the development of local talent.

The state offers a range of financial incentives for productions, including a 25-35% refundable tax credit for direct production expenditures. This effectively lowers the costs associated with hiring local crew members, procuring equipment, and utilizing in-state resources. It's worth noting that these incentives extend to post-production expenses, as well. Additionally, New Mexico has instituted a film investment loan program, which provides further assistance to qualifying projects.

The strategic implementation of these tax incentives has transformed New Mexico into a burgeoning hub for filmmakers while promoting local businesses and creating job opportunities. As more productions choose to take advantage of these benefits, it's evident that the state's investment in supporting the film industry will continue to pay off in the long run.

Overview of New Mexico Film Industry Tax Incentives

New Mexico has become a popular destination for film and television productions due to its attractive tax incentives. The state offers a 25%-35% refundable tax credit on qualified expenditures to encourage filmmakers to choose New Mexico as their production location. This financial advantage has played a crucial role in developing the state's film industry.

The tax credit program, known as the Film Production Tax Credit, benefits different types of productions, including feature films, television series, commercials, and documentaries. The amount of tax credit awarded depends on the production type and total qualified expenses. A 25% tax credit is provided for most projects, while television series and films that use local soundstage facilities are eligible for a 35% tax credit.

In addition to the refundable tax credit, New Mexico offers a 5% bonus credit for productions employing a substantial number of New Mexico residents. This incentive encourages filmmakers to utilize local talent and resources, further bolstering the state's economy and film industry.

Other perks that come with filming in New Mexico include no state sales tax on production-related goods and services, and no fee for shooting on state-owned land. These factors contribute to the affordability and convenience of filming in the state.

New Mexico's film industry tax incentives have attracted top filmmakers and renowned production companies, contributing to financial growth and job creation in the state. In turn, this has provided a stimulating platform for local talent and businesses to flourish in a competitive industry.

Qualifying Productions

In New Mexico, the film industry has seen significant growth due in part to the state's attractive tax incentives. These incentives encourage production companies to choose New Mexico as a filming location, boosting the local economy and creating job opportunities.

To qualify for the New Mexico film tax incentives, a production must fall under one of the following categories: film, television series, commercial, documentary, or music video. Furthermore, projects must meet specific requirements outlined by the State of New Mexico.

Eligible expenses are reimbursed as part of the tax incentives; these include costs associated with production, such as salaries for New Mexico residents, rental fees for equipment and facilities, and goods purchased within the state. However, there is a distinction between qualified and non-qualified expenses; only the former is eligible for tax breaks.

The New Mexico Film Office has set forth criteria for productions:

  1. A minimum budget of at least $50,000 for films or $500,000 for television shows.

  2. At least 85% of the project must be shot in New Mexico.

  3. The production company must submit a completed and approved State of New Mexico Film and Television Production Expense Tax Credit Application.

Once a project meets these requirements, production companies can access tax incentives such as:

  • 25% refundable tax credit on all direct production costs for feature films.

  • Up to 30% refundable tax credit on all direct production costs for television series.

  • Additional tax credit for hiring New Mexico residents in qualified positions.

These tax incentives have made New Mexico a popular destination for filmmakers and have led to a significant increase in productions shot in the area. By adhering to the state's guidelines and qualifying their projects, production companies can benefit from these tax breaks, further enhancing the New Mexico film industry's growth.

The Refundable Film Production Tax Credit

Credit Percentages

New Mexico offers a competitive and refundable film production tax credit for film and television productions. The base credit percentage is 25% for all eligible expenses, with an additional 5% uplift for qualifying TV productions that have a running order of at least six episodes in a single season, making it a 30% total credit for these projects.

Additional Incentives

Besides the credit percentages, the state provides additional incentives to boost film production. These include:

  • No Cap on Tax Credit: There is no limit on the total amount of credit that can be claimed by a production company, ensuring that major productions have the opportunity to maximize their incentives.

  • Stand Alone Post Production Credit: Productions that conduct only their post-production work in New Mexico are eligible for a 25% tax credit on qualified expenses.

By offering these incentives, New Mexico's film industry continues to grow and attract diverse projects, creating a thriving landscape for filmmakers and local talent.

The Film Crew Advancement Program

The Film Crew Advancement Program (FCAP) is an initiative designed to bolster New Mexico's film industry by supporting the growth of local crew members. It achieves this by providing financial incentives and training opportunities for both new and experienced film professionals.

Under this program, production companies can receive reimbursement for up to 50% of a qualifying crew member's wages. This allows the companies to invest more in their productions while still paying fair wages to the local workforce. Eligible crew members are those who are residents of New Mexico and have not yet reached a designated level in their specific job before participating in the program.

Another aspect of FCAP focuses on mentorship and on-the-job training. Experienced crew members are paired with trainees in a program where mentors provide hands-on learning and guidance. This helps in developing the trainee's skills and ensures a steady flow of skilled professionals ready to take on bigger roles in the industry.

While participating in the program, trainees must be paid a minimum wage specified for their respective classifications. This guarantees fair compensation even at the beginning of their careers. Moreover, production companies must have a qualifying production budget and must pay at least 60% of below-the-line wages to New Mexico residents.

The Film Crew Advancement Program reflects the commitment of New Mexico's government and film industry stakeholders in nurturing a sustainable and skilled workforce. By empowering local film professionals and providing them with ample opportunities, the program ensures the continued growth and success of New Mexico's film industry.

Film Investment Loans

New Mexico offers film investment loans as a way to support and boost the film industry within the state. These loans provide financial opportunities for both local and international productions, making it an attractive destination for filmmakers.

The New Mexico Film Office oversees the administration of these loans, which are designed to assist productions in meeting the necessary expenses to complete their projects. The application process is straightforward, ensuring that projects receive the support they need without excessive red tape.

There are some key features of the film investment loans that make them appealing to production companies:

  • Loan amount: New Mexico offers loans of up to $15 million, providing substantial financial backing for larger productions.

  • Interest rate: The interest rate for these loans is highly competitive and often lower than traditional bank loans, allowing filmmakers to minimize their financial risk.

  • Repayment terms: Repayment of the loan typically begins once the film starts generating revenue, providing additional flexibility for filmmakers.

  • Security: In some cases, the State of New Mexico may hold a lien on the film as collateral to secure the loan.

It is important to note that to qualify for these loans, a film project must meet specific criteria set forth by the New Mexico Film Office. Some requirements include:

  • A minimum budget of $1 million

  • At least 60% of the film project's principal photography must take place in New Mexico

  • A commitment to hire New Mexico residents for a certain percentage of crew positions

By offering these film investment loans, New Mexico continues to build a strong and thriving film industry. The availability of this financial support not only makes the state more attractive to filmmakers but also contributes to the growth of the local economy and the development of talent within the state.

Application Process and Requirements

The application process for New Mexico's film industry tax incentives is straightforward and streamlined. To start, interested parties must submit a thorough and accurate production application to the New Mexico Film Office (NMFO). The application should include relevant information such as project description, budget, and shooting locations. Along with the application, applicants must provide required documentation for certification.

Upon receipt of the application, the NMFO reviews and evaluates the project for eligibility. If approved, a preliminary certification is issued, confirming the project's qualification for tax credits. The production will then proceed as planned, ensuring strict adherence to New Mexico's film industry regulations and guidelines.

Once the production completes, a cost report must be submitted for audit purposes. This report should detail all the qualified expenditures made in New Mexico during the project. An independent certified public accountant (CPA) must verify this report to ensure compliance with the tax incentive program's requirements. Upon approval of the cost report, a final certification is granted, allowing the applicant to claim the tax credits.

There are specific requirements that projects must fulfill to be eligible for New Mexico's film industry tax incentives:

  • At least 60% of the project's principal photography must take place in New Mexico.

  • All eligible expenditures must be made within the state.

  • Productions must meet a minimum budget threshold of $50,000 for New Mexico-based expenses.

  • Both resident and non-resident labor costs can qualify for tax credits, provided that non-resident crew members do not exceed 30% of the total crew count.

By complying with the application process and meeting these requirements, productions can effectively leverage the tax incentives offered by New Mexico's film industry program.

Economic Impact on New Mexico

The film industry in New Mexico has been growing rapidly, thanks in part to the state's generous tax incentives. Production companies can receive up to a 35% refundable tax credit on direct production costs, which has attracted many high-profile projects to the state.

In recent years, New Mexico has seen a significant increase in film and television production, leading to a positive ripple effect throughout its economy. Local businesses have experienced a higher demand for their goods and services, including catering, transportation, and accommodations, which in turn creates more job opportunities for residents.

Moreover, the film industry has contributed to New Mexico's tourism growth. Movies and television shows shot in the state showcase its stunning landscapes and cultural heritage, drawing visitors from around the world. This increased tourism leads to more revenue for local shops, restaurants, and cultural institutions.

Investments in film infrastructure have also been a key factor in the industry's economic impact on New Mexico. Major studios have built state-of-the-art production facilities in the region, attracting more projects and fostering local talent. Additionally, numerous film festivals and workshops have emerged, further establishing New Mexico as a hub for the arts and creativity.

In summary, the film industry tax incentives in New Mexico have played a vital role in boosting the state's economy through job creation, increased tourism, and investments in infrastructure. The success of the incentives program reflects the state's dedication to fostering a thriving film and television industry, ultimately benefiting the residents and local economy of New Mexico.

Comparing to Other States' Incentives

New Mexico has positioned itself as a competitive destination for film and television productions due to its attractive tax incentive program. In comparison to other states, New Mexico offers a 25%-35% refundable tax credit on qualified production expenses, which include labor, goods, and services.

States like Georgia and Louisiana also have strong incentive programs, with Georgia providing tax credits of up to 30% and Louisiana offering a 25% credit on production expenditures. Both states have additional considerations that can increase the value of these credits. For example:

  • Georgia offers a 10% additional credit for use of state promotional logo.

  • Louisiana provides a 10% additional credit for qualified Louisiana screenplay productions.

Looking towards the West Coast, California has implemented a tax credit program that offers up to 25% in credits based on qualified expenditures. This program targets television, including new series, miniseries, movies of the week, and pilots. Comparatively, New Mexico's incentives encompass a wider range of production types.

On the East Coast, New York offers a 30% credit on qualified production expenses, also including an additional 10% credit on labor expenses for productions occurring in the state's designated "upstate" region.

It's important to note that each state's incentive program has unique criteria and requirements for eligibility. As such, producers should carefully examine the specific details of each program when deciding on a location for their next project. However, New Mexico's relative overall tax credit percentages and its broad range of qualifying production types make it a desirable destination for many industry professionals.

 
Sebastian Sauerborn
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