Jump to Page
Greenbaum, Rowe, Smith & Davis LLP Client Alert
4.27.21

The New Jersey Economic Recovery Act of 2020 (ERA), a seven-year, $14 billion package of incentive programs intended to encourage New Jersey job growth, property development and redevelopment, community partnerships, and numerous other economic development initiatives, was signed into law by Governor Phil Murphy on January 7, 2021.

This Client Alert focuses on the New Jersey Film & Digital Media Tax Credit Program, enabled by the Garden State Film and Digital Media Jobs Act as amended by the ERA.

Film Tax Credit Program

The Film Tax Credit Program provides for franchise and gross income tax credits to taxpayers (filmmakers) in an amount equal to 30% of the qualified film production expenses (or 35% if incurred in southern New Jersey) incurred between July 1, 2018 and July 1, 2028 (known as the “privilege period”) provided that:

(a) at least 60% of the total film production expenses of the taxpayer, exclusive of post-production costs, are incurred for services performed and/or goods purchased through vendors authorized to do business in New Jersey, or if the qualified film production expenses of the taxpayer during the privilege period exceed $1,000,000 per production;

(b) principal photography of the film commences within the earlier of 180 days from the date of the original application for the tax credit, or 150 days from the date of approval of the application for the tax credit;

(c) the film includes, when determined to be appropriate by the Motion Picture and Television Development Commission, at no cost to the State, marketing materials promoting New Jersey as a film and entertainment production destination, which materials shall include placement of a “Filmed in New Jersey” or “Produced in New Jersey” statement, or an approved logo approved by the Commission, in the end credits of the film;

(d) the taxpayer submits a tax credit verification report prepared by an independent certified public accountant licensed in New Jersey; and

(e) the taxpayer complies with certain withholding requirements provided for payments to loan out companies and independent contractors.

The term “film” is defined to include television series and television shows of 22 minutes or more in length intended for a national or regional audience.  The definition of “film” does not include news, current events, weather, market reports or public programming, talk show, sports events, programs that solicit funds, production containing obscene material, certain types of reality shows, or production intended for private, industrial, corporate or institutional purposes.

The Garden State Film and Digital Media Jobs Act appropriates an annual cumulative total of $100 million in film tax credits that may be awarded through fiscal year 2029. The ERA amendments to the legislation, however, adds two new categories of potential beneficiaries with separate appropriations:

The ERA also modifies what can and cannot be considered “qualified film production expenses” for film partners and film-lease partners.

Digital Media Tax Credit Program

The Digital Media Tax Credit Program provides for tax credits to taxpayers (digital media producers) in an amount equal to 20% of the qualified digital media content production expenses (or 25% if incurred in southern New Jersey) incurred between July 1, 2018 and July 1, 2028 (known as the “privilege period”) provided that: 

(a) at least $2,000,000 of the total digital media content production expenses of the taxpayer are incurred for services performed and/or goods purchased through vendors authorized to do business in New Jersey;

(b) at least 50% of the qualified digital media content production expenses of the taxpayer are for wages and salaries paid to full-time or full-time equivalent employees in New Jersey;

(c) the taxpayer submits a tax credit verification report prepared by an independent certified public accountant licensed in New Jersey; and

(d) the taxpayer complies with certain withholding requirements provided for payments to loan out companies and independent contractors.

The Garden State Film and Digital Media Jobs Act appropriates an annual cumulative total of $10 million in digital media content tax credits that may be awarded under the program through fiscal year 2029.

The term “digital media content” is defined to include any data or information that is produced in digital form, including data or information created in analog form but reformatted in digital form, text, graphics, photographs, animation, sound, and video content. The definition of “digital media content” does not include content offerings generated by the end user (including postings on electronic bulletin boards and chat rooms); content offerings comprised primarily of local news, events, weather, or local market reports; public service content; electronic commerce platforms (such as retail and wholesale websites); websites or content offerings that contain obscene material as defined pursuant to N.J.S.2C:34–2 and N.J.S.2C:34–3; websites or content that are produced or maintained primarily for private, industrial, corporate, or institutional purposes; or digital media content acquired or licensed by the taxpayer for distribution or incorporation into the taxpayer's digital media content.

The New Jersey Economic Development Authority (EDA) will be promulgating rules related to the implementation of the New Jersey Film & Digital Media Tax Credit Program. We will keep you updated on this and other developments related to programs enacted under the New Jersey Economic Recovery Act of 2020. Please contact the author of this Alert, Steven G. Mlenak smlenak@greenbaumlaw.com | 732.476.2526 with questions concerning the incentives outlined in this overview or to discuss your specific business circumstances. Mr. Mlenak is Chair of the firm’s Financial Incentives & Economic Development Practice Group.


RECOMMENDED

The New Jersey Economic Recovery Act of 2020: An Overview of the New Jersey Angel Investor Tax Credit Program
April 20, 2021
Greenbaum, Rowe, Smith & Davis LLP Client Alert

The New Jersey Economic Recovery Act of 2020: An Overview of the Personal Protective Equipment Manufacturing Tax Credit Program
April 15, 2021
Greenbaum, Rowe, Smith & Davis LLP Client Alert

The New Jersey Economic Recovery Act of 2020: An Overview of the Food Desert Relief Program
April 9, 2021
Greenbaum, Rowe, Smith & Davis LLP Client Alert

The New Jersey Economic Recovery Act of 2020: An Overview of the New Jersey Ignite Program
April 8, 2021
Greenbaum, Rowe, Smith & Davis LLP Client Alert

The New Jersey Economic Recovery Act of 2020: An Overview of the Relaunch of the Economic Redevelopment and Growth (ERG) Program
April 5, 2021
Greenbaum, Rowe, Smith & Davis LLP Client Alert

The New Jersey Economic Recovery Act of 2020: An Overview of the New Jersey Emerge Program
April 1, 2021
Greenbaum, Rowe, Smith & Davis LLP Client Alert

The New Jersey Economic Recovery Act of 2020: An Overview of the Brownfields Redevelopment Incentive Program
March 29, 2021
Greenbaum, Rowe, Smith & Davis LLP Client Alert

The New Jersey Economic Recovery Act of 2020: An Overview of the Main Street Recovery Finance Program
March 11, 2021
Greenbaum, Rowe, Smith & Davis LLP Client Alert

The New Jersey Economic Recovery Act of 2020: An Overview of the New Jersey Historic Property Reinvestment Program
March 8, 2021
Greenbaum, Rowe, Smith & Davis LLP Client Alert

The New Jersey Economic Recovery Act of 2020: An Overview of the New Jersey Community-Anchored Development Program
March 4, 2021
Greenbaum, Rowe, Smith & Davis LLP Client Alert

The New Jersey Economic Recovery Act of 2020: An Overview of the New Jersey Innovation Evergreen Act
March 1, 2021
Greenbaum, Rowe, Smith & Davis LLP Client Alert

The New Jersey Economic Recovery Act of 2020: An Overview of the New Jersey Aspire Program
February 25, 2021
Greenbaum, Rowe, Smith & Davis LLP Client Alert

Greenbaum, Rowe, Smith & Davis LLP Announces Launch of Financial Incentives & Economic Development Practice Group
February 23, 2021
Greenbaum, Rowe, Smith & Davis LLP Press Release

Attorneys