A new bill filed last week would increase existing rebates in Alabama for entertainment industry-related production costs more than seven times over.
Sponsored by Sen. Garlan Gudger, R-Cullman, the bill aims to see Alabama rival neighboring Georgia, which in 2008 passed significant tax incentives for the entertainment industry. Known as the Qualified Interactive Entertainment Credit, Georgia’s incentive program has made the state a national hub for the entertainment industry, with film and television production spending reaching a record $4.4 billion in 2022.
The bill would modify the existing entertainment industry incentives in Alabama known as the Entertainment Industry Incentive Act, which was passed into law in 2009.
Under the state’s existing incentive program, production companies are eligible for a 25% rebate on all production expenditures – including 35% of payroll paid to Alabama residents – with an annual spending cap of $20 million. Production costs must also reach at least $500,000 to be eligible for the rebates.
If the amount in rebates exceeds a production company’s tax liability, then the excess is refunded to the company.
Under Gudger’s proposed bill, which is known as the Film and Music Incentive Act of 2023, the $20 million cap on expenditures eligible for the 25% rebate would be incrementally increased to $150 million. The cap would first be raised from $20 million to $65 million immediately upon the bill becoming law, to $110 million in late 2024, and to $150 million in late 2025.
According to a report from the Alabama Department of Commerce, 11 production companies claimed rebates under the incentive program in 2021 totaling $12.8 million, and were exempt from $8.2 million in sales tax and $21.7 million in lodgings tax. Since the program’s inception in 2009, 115 taxpayers have qualified for the program and claimed rebates totaling $97 million, and were exempt from $102.5 million in sales tax and $291.7 million in lodgings tax.
The annual cap of $20 million was reached in 2019, which according to the Commerce report, led to some production companies inquiring about the program to not move forward with the application process.
Stefania Jones, governmental relations and marketing manager for the Department of Commerce, said that while her department’s main focus right now is the implementation of Gov. Kay Ivey’s economic incentive bill package known as the “Game Plan,” which was passed into law last month, the department is supportive of the idea.
“We’re supportive of an expansion of activities involving film and TV production, as well as other entertainment industry projects in Alabama,” Jones told Alabama Daily News.
The state of Alabama received notoriety in the film industry recently during the 95th Academy Awards when Birmingham native Daniel Sheinert – along with Daniel Kwan – won three Oscars for their 2022 film “Everything Everywhere All at Once.”
This article has been updated to reflect that the Department of Commerce supports the idea of expanding film and TV production projects, but not necessarily Gudger’s legislation.
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