SENATE BUDGET AND APPROPRIATIONS COMMITTEE
STATEMENT TO
SENATE, No. 4618
with committee amendments
STATE OF NEW JERSEY
DATED: JUNE 26, 2025
The Senate Budget and Appropriations Committee reports favorably and with committee amendments Senate Bill No. 4618.
As amended and reported, this bill modifies certain provisions of the film and digital media content production tax credit program (program) administered by the New Jersey Economic Development Authority. Among other changes, the bill extends the program’s availability until July 2049, ten years longer than it is available under current law.
Increased Tax Credit Awards
This bill increases the amount of tax credits that may be awarded to a New Jersey studio partner under the program, from 35 percent to 40 percent of the taxpayer’s qualified film production expenses during a tax period, when the expenses are incurred for services performed and tangible personal property purchased for use at a sound stage or other location within the State and within a 30-mile radius of the intersection of Eighth Avenue/Central Park West, Broadway, and West 59th Street/Central Park South, New York, New York.
Under the bill, a taxpayer may also qualify for additional tax credits, not to exceed five percent of the taxpayer’s qualified film production expenses or qualified digital media content production expenses. According to the conditions in the bill, additional tax credits may be allowed for hiring residents from certain areas in the State and for the promotion of this State. The bill limits the total amount of tax credits allowed under the program to 45 percent of the qualified film production expenses or qualified digital media content production expenses.
Reality Show Total Film Production Expenses
This bill removes a requirement under current law that, for a reality show: (1) at least 60 percent of the total film production expenses, exclusive of post-production costs, of the taxpayer are incurred for services performed and goods purchased through vendors authorized to do business in New Jersey; and (2) the qualified film production expenses of the taxpayer during the privilege period for services performed and goods purchased through vendors authorized to do business in New Jersey exceed $1,000,000 per production. Instead, a reality show is required to meet either requirement, as other films are required to under current law.
New Jersey Film-Lease Post-Production Company
The bill defines a “New Jersey film-lease post-production company” to mean a taxpayer, including any taxpayer that is a member of combined group or any other entity in which the New Jersey film-lease post-production company has a material ownership interest and a material operational role in the production, that otherwise complies with the eligibility requirements of the program, has made a commitment to lease or otherwise occupy production space in a New Jersey film-lease partner facility, and satisfies certain criteria set forth in the bill.
If a New Jersey film-lease partner facility has not received a temporary or final certificate of occupancy, a New Jersey film-lease post-production company is required to have entered into a lease or sublease with the owner or developer of a New Jersey film-lease partner facility, which lease or sublease is for not less than three years of occupancy of the New Jersey film-lease partner facility and includes at least 36,000 square feet of gross rentable space. For purposes of satisfying certain provisions in the bill, a New Jersey film-lease post-production company may include in an application the qualified digital media content production expenses incurred for post-production, including visual effects activities that are performed by the New Jersey film-lease post-production company or by a business entity in which the New Jersey film-lease post-production company has an ownership interest of at least 51 percent.
Qualified Post-Production Company
The bill replaces the definition of “independent post-production company” with a definition of “qualified post-production company” and replaces the former term with the latter throughout the bill. Under the bill, "qualified post-production company" means a corporation, partnership, limited liability company, or other entity engaged in post-production, including visual effects activities on a film or films described in this section, including, but not limited to, a film or films that do not satisfy certain requirements under the bill.
Under the program, a
taxpayer’s expenses for visual effects services performed by a qualified
post-production company may include qualified digital media content production
expenses incurred for post-production, including visual effects activities
performed by a business entity in which the qualified post-production company
has an ownership interest of at least 51 percent.
Application and Carry Forward of Credit
The bill provides that a credit issued to a taxpayer, including the purchaser or assignee of a tax credit transfer certificate, may first be taken by the tax certificate holder for1 the tax period for which it was issued, for the tax period in which it was issued, or in any tax period during the time a business is required to maintain the project at a location in this State, subject to the bill’s carryforward provisions. Under the bill, the tax credit transfer certificate holder may transfer the tax credit amount on or after the date of issuance for use by the transferee in the tax period for which it was issued, in the tax period for which it was issued, or in any of the next successive tax periods, subject to the bill’s carryforward provisions. The tax certificate holder or transferee may first use the credit against tax liabilities in the tax period in which it was issued or in a succeeding tax period, subject to the provisions in the bill, without the need to amend the return for the year for which the credit was issued.
Remaining Credit Availability
This bill adds a provision to current law, requiring that if the amount of tax credits approved to taxpayers other than New Jersey studio partners and New Jersey film-lease production companies, the authority certify the amount of remaining tax credits available for approval in that fiscal year. The bill requires that up to $100 million of unused tax credits from a prior fiscal year are to be made available to a New Jersey studio partner under certain circumstances. If the certified amount is less than $100 million, the authority is to approve the remainder, as available, from the unused Aspire Program and Emerge Program credits already available under current law. If there are insufficient funds, the authority is to approve the remainder instead from the tax credits allocated in the current fiscal year to taxpayers other than New Jersey studio partners and New Jersey film-lease production companies.
Recapture of Tax Credits
Under current law, the approval of tax credits for New Jersey studio partners and New Jersey film-lease production companies is subject to award agreements with the authority detailing obligations of the awardee and outcomes relating to events of default, including, but not limited to, the recapture of tax credits. The bill provides that the recapture of tax credits may only apply to the initial recipient of the tax credits, not the purchaser or assignee of a tax credit transfer certificate.
Current law also provides that if a New Jersey studio partner fails to occupy the production facility developed, purchased, or leased as a condition of designation as a New Jersey studio partner for the duration of the commitment period, the authority is required to recapture certain portions of the tax credit. This bill instead authorizes the authority to recapture certain portions of the tax credit in these instances. However, the bill also provides an exception to this recapture provision in any circumstance in which the New Jersey studio partner fails to occupy the production facility for any reason outside the control of the New Jersey studio partner. The bill includes similar exceptions for failure to occupy the required space for a New Jersey film-lease production or New Jersey film-lease post-production company.
Deferred Compensation
Under current law, a New Jersey studio partner that makes certain deferred compensation payments is permitted to file a supplemental report no later than two years after the date on which the production concludes. This bill modifies current law to permit the submission of a supplemental report no later than four years after the date on which the production concludes.
Additionally, the bill permits a New Jersey studio partner to include deferred compensation payments made directly to a bona fide labor union, including those payments for which tax was not withheld under the gross income tax, within qualified film production expenses, provided that the payments otherwise satisfy the requirements of the program.
Current law permits a New Jersey studio partner that incurs $25 million or more in qualified film production expenses in the State to include within “qualified film production expenses,” in excess of amounts paid to highly compensated individuals, up to $72 million of certain wages or salaries. This bill additionally permits a New Jersey studio partner that incurs $125 million or more in qualified film production expenses in the State for the production of a feature film to include within “qualified film production expenses,” in excess of the amounts paid to highly compensated individuals, amounts paid for scripts, and amounts paid or incurred for deferred compensation, to include up to $72 million of certain wages and salaries.
Expansion of Transferred Tax Credit Applicability
Under current law, tax credits awarded under the program may be applied against a taxpayer’s liability under the gross income tax or corporation business tax. In addition, this bill authorizes the application of transferred credits against a taxpayer’s liability for an insurance premium tax.
Credit for Diversity Plan
Under current law, a taxpayer who is eligible for tax credits under the program may receive an additional credit in an amount equal to two percent of the qualified film production expenses or four percent of the digital media content production expenses of the taxpayer during a tax period if: (1) the application is accompanied by a diversity plan outlining specific goals, which may include advertising and recruitment actions, for hiring minority persons and women; (2) the director and the authority have approved the plan as meeting the requirements established by the director and the authority; and (3) the director and the authority have verified that the applicant has met or made good faith efforts in achieving those goals.
Current law provides that a tax credit for four percent of qualified film production expenses may be available to a taxpayer, rather than two percent, if the diversity plan includes specific goals that include hiring persons as performers in the film who are: (1) women or members of a minority group; (2) residents of New Jersey for at least 12 months preceding the beginning of filming or recording; and (3) members of a bona fide labor union representing film and television performers.
This bill removes the additional requirements necessary for a taxpayer to receive a four percent tax credit, rather than two percent, and increases the bonus credit for all eligible applicants. Under the bill, a taxpayer may earn a credit equal to four percent of qualified film production expenses for a diversity plan meeting the same criteria required for a credit equal to four percent of digital media content production expenses.
In addition, this bill requires, instead of a diversity plan for hiring minority persons and women, that an application for this additional credit be accompanied by a plan outlining specific goals, which may include advertising and recruitment actions, for hiring residents of an economically disadvantaged area in the State, a distressed municipality, or land owned by the federal government on or before December 31, 2005.
New Jersey Promotion and Support Credit
In addition to the amount of tax credits otherwise allowed under the program, the bill allows an additional promotional tax credit for certain film productions in an amount equal to four percent of a taxpayer’s qualified film production expenses or qualified digital media content production expenses under certain conditions. Specifically, a New Jersey studio partner or New Jersey film lease production company may qualify for this additional credit by submitting, alongside an application to the authority and the Director of the Division of Taxation in the Department of the Treasury (director), a plan outlining specific goals to promote or invest in New Jersey. Under the bill, a taxpayer is required to include at least two promotional criteria in the plan, and the authority and director are required to verify that the taxpayer has met the goals outlined in its plan.
Specifically, a taxpayer is required to satisfy at least four of the following criteria to qualify for the additional promotional credit:
(1) the creation of a video at least three minutes in length of publicly accessible locations in New Jersey used for the film, with commentary on how and why each location was chosen, published on the Internet website promoting the film or in another form and manner approved by the authority;
(2) the creation of five public social media posts including commentary on positive experiences at publicly accessible New Jersey locations or positive experiences filming in the State;
(3) the placement of a New Jersey promotional logo provided by the authority for a two-second exposure, not displayed over content or on a shared card, and displayed before the below-the-line crew crawl and after contractual credit placement obligations;
(4) the film is set, at least in part, in New Jersey, and the State is referenced in the film;
(5) support for a workforce development program established by the taxpayer with a college, including a community college, an apprentice program, or a university in this State, which program includes direct training or employment opportunities on the film for residents of this State;
(6) a film industry recruiting program established by the taxpayer providing paid internships or entry level employment opportunities in film crew positions for New Jersey residents of an economically disadvantaged New Jersey area, a distressed municipality, or land owned by the federal government on or before December 31, 2005;
(7) the taxpayer engages at least five vendors authorized to do business in New Jersey, each of which employs at least one full-time employee at a physical location in an economically disadvantaged area in the State, a distressed municipality, or on land owned by the federal government on or before December 31, 2005; and
(8) any alternative criteria as the authority may provide.
Modification of Definitions
This bill amends the definition of “commitment period” for New Jersey studio partners under the program to be the period beginning with the commencement of the eligibility period and continuing for a minimum of 10 years following the issuance of a temporary certificate of occupancy or commencement of a lease term, as appropriate. Under current law, the commitment period expires 10 years following the issuance of a temporary certificate of occupancy or commencement of a lease term.
The bill also amends the definition of “eligibility period,” in the case of a taxpayer leasing a production facility, to mean the period beginning at the commencement of the lease term for the production facility leased as a condition of designation as a New Jersey studio partner, and extending thereafter for a term of not less than 10 years. Under current law, the term is limited to a maximum of 10 years.
The bill includes within the definition of “film,” for a New Jersey studio partner, an ongoing television production that relocated to New Jersey and features news or current events, which may include sports themed current events programming, but shall not include a sports event, provided that the ongoing television production relocates to a New Jersey studio partner facility that is leased or owned by the New Jersey studio partner. The bill also amends this definition so that a reality show that has obtained a minimum four-episode, rather than six-episode, order and otherwise meets the definition’s requirements may be included in the definition of “film.”
The bill amends the definition of “highly compensated individual” to remove a distinction under current law that, for New Jersey studio partners and New Jersey film-lease production companies, an individual who directly or indirectly receives compensation in excess of $500,000 for the performance of services used directly in a production. Instead, for any taxpayer, the term means an individual who directly or indirectly receives compensation in excess of $750,000 for the performance of services used directly in a production.
The bill amends the definition of “New Jersey film-lease production company,” in relevant part, to mean a taxpayer, including any taxpayer that is a member of a combined group or any other entity in which the film-lease production company has a material ownership interest and has oversight of operations of the entity, as demonstrated by the control of at least one board of director position or other management responsibilities, or has a material operational role in the production, which taxpayer meets additional requirements. Under current law, the term includes a taxpayer that is a member of a combined group or any other entity in which the film-lease production company has a material ownership interest and material operation role in the production, among additional requirements.
The bill further amends the definition of a “New Jersey film-lease production company” to include any other member of a taxpayer's combined group, any other entity in which the New Jersey film-lease production company has a material ownership interest, or an unrelated entity principally engaged in the production of a film or other commercial audiovisual product with whom a designated New Jersey film-lease production company contracts to perform film production services on its behalf such that the designated New Jersey film-lease production company: (1) controls such film or product during preproduction, production, and postproduction; or (2) controls distribution rights for the resulting film or other commercial audiovisual product, provided that the New Jersey film-lease production company contracted with the unrelated entity prior to qualified film production expenses being incurred. Under current law, this term includes an unrelated entity engaged in the production of a film or other commercial audiovisual product with whom a designated New Jersey film-lease production company contracts to perform film production services on its behalf such that the designated New Jersey film-lease production company controls such film or product during preproduction, production, and postproduction and all results and proceeds of such services constitute, from the moment of creation, “works made for hire” for the New Jersey film-lease production company pursuant to the provisions of the federal “Copyright Act of 1976.”
The bill amends the definition of “qualified film production expenses” to include, for a New Jersey studio partner or New Jersey film-lease production company that enters into a lease to occupy a New Jersey film-lease partner facility for at least three years, in a percentage proportional to the percentage or principal photography shoot days in the State: total production insurance premiums paid to insurance companies doing business in New Jersey, which premiums shall exclude payments for errors and omissions insurance; total producer fees; and total rights fees. These expenses are not permitted to exceed seven and one-half percent of “qualified film production expenses.”
State Purchase of Tax Credits
Under current law, the director is permitted to purchase unused tax credits awarded under various economic development programs established under the “New Jersey Economic Recovery Act of 2020,” including the Aspire Program and the Cultural Arts Incentives Program.
Under the bill, the director is required to purchase unused tax credits and tax credit transfer certificates awarded under the Aspire Program and the Cultural Arts Incentives Program in an amount equal to 85 percent of the value of the tax credit, provided that certain conditions are met. The bill also requires that the director purchase unused tax credits and tax credit transfer certificates awarded under the film and digital media content production tax credit program in an amount equal to 95 percent of the value of the tax credit, provided that certain conditions are met. In each case, the bill requires the issuance date of the tax credit certificate or tax credit transfer certificate to have occurred at least one year prior to the date of application to the director.
Specifically, the bill requires the director to purchase unused tax credits and tax credit transfer certificates awarded under the film and digital media content production tax credit program valued at no more than a cumulative amount of $80 million in State fiscal year 2026, $160 million in State fiscal year 2027, $240 million in State fiscal year 2028, and $200 million in each State fiscal year thereafter, subject to certain conditions.
COMMITTEE AMENDMENTS:
The committee amended the bill to:
(1) remove a requirement under current law that, for a reality show: (a) at least 60 percent of the total film production expenses of the taxpayer, exclusive of post-production costs, are incurred for services performed and goods purchased through vendors authorized to do business in New Jersey; and (b) the qualified film production expenses of the taxpayer during the privilege period for services performed and goods purchased through vendors authorized to do business in New Jersey exceed $1,000,000 per production. Instead, a reality show is required to meet only one of these requirements, as other films are required to under current law;
(2) remove a provision in the bill that, as introduced, would have created an additional incentive under the program for a television series that relocated to New Jersey;
(3) revise the additional tax credits available under the bill to be four percent, instead of four and one-half percent, for hiring residents from certain areas in the State and for promotion of this State. The amendments limit the aggregate additional amount of these additional tax credits to a total of five percent of the qualified film production expenses or qualified digital media content production expenses of the taxpayer incurred during a tax period. The amendments limit the total amount of tax credits permitted to a taxpayer under the program to 45 percent of the qualified film production expenses or qualified digital media content production expenses;
(4) clarify language concerning the ability of a taxpayer to use and carry forward tax credits awarded under the program;
(5) remove language from the bill that would have amended current law to adjust certain maximum cumulative total awards and additional discretionary awards under the program;
(6) clarify that provisions of the bill prohibiting recapture of tax credits for the failure to occupy the production facility for any reason outside the control of an entity are 1subject to any rules the authority may determine necessary to implement this provision, including, but not limited to, a definition of reasons outside the control of the entity;
(7) require that, if the amount of tax credits approved to taxpayers other than New Jersey studio partners and New Jersey film-lease production companies, the authority certify the amount of remaining tax credits available for approval in that fiscal year. The amendments require that up to $100 million of unused tax credits from a prior fiscal year are to be made available to a New Jersey studio partner under certain circumstances. If the certified amount is less than $100 million, the authority is to approve the remainder, as available, from the unused Aspire Program and Emerge Program credits already available under current law. If there are insufficient funds, the authority is to approve the remainder instead from the tax credits allocated in the current fiscal year to taxpayers other than New Jersey studio partners and New Jersey film-lease production companies;
(8) amend the definition of “film” to provide that a reality show that has obtained a minimum four-episode order form and otherwise meets the requirements of the bill may qualify as a “film.” Current law requires a six-episode order form;
(9) amend the definition of “qualified film production expenses” to include, for a New Jersey studio partner or New Jersey film-lease production company that enters into a lease to occupy a New Jersey film-lease partner facility for at least three years, in a percentage proportional to the percentage or principal photography shoot days in the State: total production insurance premiums paid to insurance companies doing business in New Jersey, which premiums shall exclude payments for errors and omissions insurance; total producer fees; and total rights fees. These expenses are not permitted to exceed seven and one-half percent of “qualified film production expenses”;
(10) revise a provision in the bill that prohibits the authority from recapturing any tax credits within two years of the date of certain entities’ lease, provided that certain conditions are met, to instead prohibit recapture within one year of that date and to permit the authority to extend that period for one additional year under the conditions outlined in the bill;
(11) add a provision to current law that a television series produced by a New Jersey film-lease company that satisfies the three year lease requirements under this paragraph and that commences principal photography in New Jersey prior to the New Jersey film-lease partner facility's receipt of a temporary or final certificate of occupancy remains eligible to receive the tax credits only available to the film production company by virtue of the film production company's designation as a New Jersey film-lease production company, provided that the series continues production in New Jersey, the film production company continues to satisfy the requirements of a New Jersey film-lease production company at least through the conclusion of production of the television series in New Jersey, and the television series continues to satisfy the requirements for a film that commences production prior to the New Jersey film-lease partner facility’s receipt of a temporary or final certificate of occupancy;
(12) clarify that, among the criteria in the bill for additional tax credits for promoting New Jersey, an applicant may include support for a workforce development program established by the taxpayer with a college, including a community college, an apprentice program, or a university in this State, which program includes direct training or employment opportunities on the film for residents of this State;
(13) require that, to qualify for additional credit under the bill for promotion of or investment in New Jersey, a taxpayer is required to include at least four, rather than two, of the criteria outlined in the bill. The amendments eliminate a provision of the bill that, as introduced, would have provided an opportunity for more tax credits if four criteria were met, rather than two;
(14) authorize the creation of social media posts from an official account of a leading actor or actress in the film for the purpose of fulfilling the criteria for the creation of five public social media posts, as described in the bill, for the purpose of the additional credit for promotion of or investment in New Jersey;
(15) require the director to purchase unused tax credits and tax credit transfer certificates awarded under the film and digital media content production tax credit program valued at no more than a cumulative amount of $80 million in State fiscal year 2026, $160 million in State fiscal year 2027, $240 million in State fiscal year 2028, and $200 million in each State fiscal year thereafter, subject to certain conditions;
(16) make technical changes.
FISCAL IMPACT:
Fiscal information for this bill is not currently unavailable.