Bill > S3369

Introduced Session

This bill revises certain provisions of the film and digital media content production tax credit program to increase the amount of credits that may be awarded based on certain post-production costs. The bill also revises other provisions of the program, including increasing eligibility for compensation paid to persons who are not subject to tax under the "New Jersey Gross Income Tax Act" due to a tax reciprocity agreement with another state. Under the film and digital media content production tax credit program, the New Jersey Economic Development Authority (EDA) awards corporation business tax and gross income tax credits to eligible taxpayers equal to (1) 30 percent of the qualified film production expenses incurred for use within certain parts of Northern New Jersey, or 35 percent of qualified film production expenses incurred for use within all other parts of the State; and (2) 35 percent of the qualified digital media content production expenses incurred through vendors located in certain counties in Southern New Jersey, or 30 percent of all other qualified digital media content production expenses incurred through vendors within the State. In addition to certain other eligibility requirements, current law also provides that to qualify for the digital media content production tax credit, at least 50 percent of the qualified digital media content production expenses incurred by the taxpayer are required to be for wages and salaries paid to full-time or full-time equivalent employees in New Jersey. Increased Digital Media Content Production Tax Credits The bill increases the amount of digital media content production tax credits that may be awarded to taxpayers for qualified digital media content production expenses related to certain post-production services, including visual effects. Specifically, the tax credit would be equal to 40 percent of the qualified digital media content production expenses of the taxpayer incurred during the tax period for post-production services performed at a New Jersey film-lease production facility, provided that at least $500,000 of these expenses were incurred for services performed at the New Jersey film-lease production facility. Additionally, the tax credit would be equal to 35 percent of the qualified digital media content production expenses of the taxpayer incurred during the tax period for post-production services performed by independent post-production companies, as defined in the bill. In either circumstance, if the taxpayer includes a diversity plan with their tax credit application and complies with all relevant requirements established in that plan, the taxpayer's tax credit may be increased by an additional four percent. Compensation Subject to Tax Reciprocity Agreements Under current law, the terms "qualified film production expenses" and "qualified digital media content production expenses" are defined to include, among other expenses, the wages and salaries paid to individuals who are employed for the purposes of the production and who are subject to the tax imposed by the "New Jersey Gross Income Tax Act." Current law also defines the term "full-time or full-time equivalent employee" to include persons working not less than 35 hours per week, or other standard of service accepted by custom or practice as full-time or full-time equivalent employment, and whose wages and salaries are subject to withholding as provided in the "New Jersey Gross Income Tax Act." This bill expands the scope of qualified film production expenses and qualified digital media content production expenses to include wages and salaries that are paid to individuals who are employed for the purposes of the production and who are not subject to tax under the "New Jersey Gross Income Tax Act" due to the provisions of a tax reciprocity agreement with another state. The bill also provides that these expenses would include any payments made by the taxpayer to a loan out company for services performed in New Jersey by individuals who are employed by the loan out company and whose wages and salaries are not subject to tax under the "New Jersey Gross Income Tax Act" due to the provisions of a tax reciprocity agreement with another state. Additionally, the bill amends the definition "full-time or full-time equivalent employee" to include otherwise eligible persons whose wages and salaries are not subject to tax under the "New Jersey Gross Income Tax Act" due to the provisions of a tax reciprocity agreement with another state. Currently, the State has entered into a reciprocal income tax agreement with the Commonwealth of Pennsylvania. Under the terms of this agreement, compensation paid to Pennsylvania residents who are employed in New Jersey is not subject to tax under the "New Jersey Gross Income Tax Act." Accordingly, the bill provides that wages and salaries paid to certain Pennsylvania residents may be included as qualified film production expenses and qualified digital media content production expenses, provided that these persons are employed in New Jersey for the purposes of the film or digital media content production. Tenants of New Jersey Film-Lease Partner Facilities The bill also provides that certain tenants of New Jersey film-lease partner facilities would be eligible for tax credits under the program. Specifically, the bill provides that any film production company that enters into a lease or sublease with the owner or developer of a designated New Jersey film-lease partner facility before receipt of the facility's temporary or final certificate of occupancy, which lease or sublease is for not less than three years and includes at least 36,000 square feet of soundstage space, and which company executes a contract to provide production services for all films produced at the New Jersey film-lease partner facility, would be eligible for the tax credit allowed for a taxpayer designated as a New Jersey film-lease production company, provided that the film production company satisfies all other eligibility requirements for New Jersey film-lease production companies. If the EDA determines that a New Jersey film-lease partner facility has failed to meet the requirements of the program, the EDA may rescind the New Jersey film-lease partner facility designation. In this circumstance, the bill provides that any tenant of the New Jersey film-lease production company that has entered into a lease for the film-lease partner facility would not be entitled to the portion of any tax credit that is only available to the New Jersey film-lease production company by virtue of the company being a tenant at a New Jersey film-lease partner facility.

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Committee Categories

John McKeon (D)*,  Raj Mukherji (D)*,  Paul Moriarty (D), 

Introduced in the Senate, Referred to Senate Economic Growth Committee (on 06/03/2024)

Official Document