Coming Attraction: The Arizona Film Incentive

Since HB 2156 was signed into law in July 2022, Arizona now has a tax incentive program for the motion picture industry. This will bring Arizona in line with other states, including New Mexico, Georgia and New Jersey, which already have film incentives. The law went into effect January 2023, but the rules and applications will not be available until September 2023, because the funds go through the Arizona Department of Revenue. 

The Arizona Commerce Authority is working through the fine details of the rules and application. Here’s an example of how the rules could impact production: Let’s say you have a $9 million film. There is a 15% credit allocation for productions under $10 million. If you use Arizona local labor, you get an additional 2.5% credit; if you use a qualified post-production facility, you get another 2.5%; and if you use a qualified production facility, yet another 2.5%, plus an additional percentage for the length of the project. All of which could allow your $9 million film up to a 22.5% tax credit. So here’s the rub: How much local labor qualifies your film for the 2.5%? What qualifies as a production facility? That is what the Commerce Authority is currently working out.

The first year of the program will disperse $75 million, $100 the next year, and then $125 million each year after that. This program does not sunset until 2043, which is a significant achievement for an incentive and very appealing to employers securing long-term productions.

Saylor Billings, a member of the Arizona-Utah Local Communications Committee who’s been keeping a close eye on this law, says, “Depending on your viewpoint, one part of the law is either a plus or a minus. The law has square-footage requirements for production and post-production facilities and, as of now, Arizona does not have that level of infrastructure. The plus is that the law incentivizes infrastructure building, but the minus is that construction takes 18 months and mid-level studios already established in Arizona could possibly not qualify for the tax incentive. Ultimately, the direct impact on the economy will be enormous.”

According to the Georgia Department of Economic Development, the film industry spent $4.4 billion in Georgia in 2022. Arizona is a long way from those numbers, but clearly a plan is in place to rebuild our film community. Here is the breakdown of the Arizona Film Incentive Program in all its legalese glory.