Why would a producer sell a tax credit?
Because most productions don't owe enough state tax to use one. A film tax credit reduces the state income tax a company owes. A production company formed to make a single movie in Georgia usually owes Georgia very little tax, so a credit worth millions is useless to it unless it can be turned into cash some other way.
States have built two ways to do that. A credit pays the production in cash, through the tax return, even if it owes nothing. A credit can be sold to another taxpayer who does owe the state money, usually for a little less than face value.1
So a film tax credit behaves more like a coupon than a refund check. The state prints it, and the producer has to find someone who shops in that state.
What's the difference between a refundable and a transferable film tax credit?
A refundable credit is paid by the state. New Mexico is the classic example: it offers a 25 percent refundable credit on in-state production and post-production spending, with an extra 10 percent for filming in rural counties.5 Hawaii's credits are refundable too, at 22 to 27 percent.1
A transferable credit is sold to a private buyer, usually a company or wealthy individual with a large tax bill in that state. Georgia is the biggest example. One guide puts the usual price range for transferable credits at 85 to 95 cents per dollar, depending on the state, the size of the credit and demand.1
The distinction matters more than the headline percentage. A 30 percent transferable credit and a 25 percent refundable credit can put similar amounts of cash in a producer's account, once the transfer discount and timing are counted.
How does the Georgia film tax credit market work?
Georgia offers a 20 percent credit to productions spending at least $500,000 in the state, plus another 10 percent for including the Georgia promotional logo in the credits, with no annual cap.2 That peach logo at the end of so many films is worth ten points of the budget's qualified spend. Few graphic design jobs in history have paid better.
Most of those credits get sold. A 2020 state audit found roughly 80 percent of Georgia's credits were sold, typically at about 90 cents on the dollar, and nearly 90 percent of credits went to companies based outside Georgia.2 In 2021 alone, the state issued $1.2 billion in credits against $4 billion of production spending.2
The market has had its scares. In 2022, a Georgia Senate committee backed a measure that would have capped the credit at $900 million a year and barred companies from selling their credits, and the trade press treated the ban on sales as the bigger threat to Hollywood than the cap.2 Producers noticed, because without transferability most of those credits would be worth very little to the companies that earned them.
Can you sell a California film tax credit?
Only if you are an independent film. California's Program 4.0 expanded the state's incentive to $750 million a year, $3.75 billion over five years, running until June 30, 2030.4 The base credit is 35 percent for features and most television, and independent features can reach as high as 45 percent with uplifts, on up to $20 million of qualified spending.3
Independent features are the only category allowed to transfer their credits. Everyone else can elect a refundable credit instead, a first for California: the state refunds up to 90 percent of the credit that exceeds the company's California tax liability, paid out over five years.3 The election has to be made in the year the credit certificate is issued.3
Five years is a long time to wait for money a production spent last spring. That timeline is one reason the lending market around tax credits exists, and it matters most to the independent producers California was trying to keep at home.
How much of a film tax credit does a producer actually keep?
Less than the headline. The credit is calculated on qualified spending, not the whole budget, and then it is discounted when sold. One guide's illustration: a 30 percent credit can net 26 or 27 percent after the transfer discount and broker fees.1 Brokers take their margin or commission on top of the discount.1
Timing takes another bite. Credits are usually certified after the production finishes and passes an audit, and the shoot needs the money months earlier. So producers borrow against the expected credit, with banks typically lending 85 to 90 percent of its estimated value.6 The loan gets repaid when the credit is sold or refunded, and the interest comes out of the producer's side.
What can go wrong with a film tax credit?
The credit isn't money until the state certifies it. A production that moves locations, fails to hire enough local crew or loses its certification can lose the credit, and a production that borrowed against it can default on the loan.6
That risk sits in the budget like a quiet tenant. The tax credit is often the first slice of independent financing, and lenders are only willing to treat it as near-cash because the producer has promised to follow every rule the state wrote. Break one and the stack above it shifts. I explain how that slice fits with presales and gap loans in how gap financing works.
Investors approaching the same incentives from the other side, as buyers of credits or as partners stacking them with other programs, can start with my piece on qualified opportunity funds for film production, which covers layering state credits with federal programs.
Questions people search
Can you sell a film tax credit?
In states with transferable credits, such as Georgia, yes. Productions sell credits to companies or individuals who owe state tax, usually at a discount.
How much do Georgia film tax credits sell for?
A 2020 state audit found they typically sold for about 90 cents on the dollar, with roughly 80 percent of credits sold.
What is the difference between a refundable and a transferable tax credit?
A refundable credit is paid in cash by the state. A transferable credit is sold to a private buyer who uses it against their own state taxes.
Are California film tax credits transferable?
Under Program 4.0, only independent features can transfer their credits. Other productions can elect a refundable credit paid out over five years.
What is the California film tax credit rate?
Under Program 4.0, the base credit is 35 percent for features and most television, and independent features can reach 45 percent with uplifts on up to $20 million of spending.
Is the New Mexico film tax credit refundable?
Yes. New Mexico offers a 25 percent refundable credit, with a 10 percent uplift for filming in rural counties.
Can you borrow against a film tax credit?
Yes. Lenders commonly advance 85 to 90 percent of the credit's estimated value before it is certified.
- Beancount, guide to state film tax credits: refundable, transferable and broker discounts, October 2026. beancount.io
- Entertainment Partners, "Georgia Proposes Capping and Prohibiting Sale of Film Tax Credits" (via The Hollywood Reporter), March 30, 2022. ep.com
- Wrapbook, "California Film Tax Credit" guide to Program 4.0. wrapbook.com
- California Film Commission, "The Basics (4.0)." film.ca.gov
- Motion Picture Association, New Mexico production incentives. motionpictures.org
- LexPlug, "Pre-Sales, Gap Financing, & Tax Incentives," entertainment law outline. lexplug.com
I'm a producer and a former film acquisitions executive, not a lawyer or an accountant. Nothing here is legal, tax or financial advice. Before you sign anything, talk to an entertainment attorney.