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June 15, 2024

Tennessee announces new tax credit for entertainment industry

Tennessee’s new entertainment tax credit, an incentive for everything from television shows and films to video game development and post-production, was announced Tuesday by the Tennessee Department of Revenue and Department of Economic and Community Development (TNECD).

The credit was initiated last July after a bill became law allowing for a payroll tax credit up to 40%, with a 10% incentive for economically distressed areas, along with a 9.25% to 9.75% sales tax break for goods and services used for production.

Public Charter 70 is expected to cost the state $1.35 million this fiscal year and next before progressively increasing to a $15.75 million cost to the state in fiscal 2026-27, according to the bill’s fiscal note.

“Tennessee is home to one of the most robust entertainment industries in the world, and we strive to provide the resources needed for our state to build upon this momentum,” TNECD Commissioner Bob Rolfe said. “We are proud to partner with the Department of Revenue and Tennessee Entertainment Commission and look forward to seeing how this new program will further strengthen our state’s entertainment footprint while creating additional jobs for Tennesseans.”

Categories eligible for franchise and excise tax credit include scripted and unscripted television shows, feature films, video game development, animation, commercials and audio/visual postproduction.

“We appreciate the opportunity to work with the Tennessee Entertainment Commission, the Tennessee Department of Economic and Community Development, and the entertainment industry to make this incentive a success,” Revenue Commissioner David Gerregano said. “Through this collaboration, we are happy to support the continued growth of Tennessee’s entertainment industry.”

Tennessee currently has a 7.0% state sales tax rate with the average local tax at 2.5%. The program is expected to have an annual $550,000 impact on local sales tax collections.

“Incentives play a pivotal role in the development of talent, workforce and infrastructure in the entertainment industry,” Tennessee Entertainment Commission Executive Director Bob Raines said. “The Tennessee Entertainment Commission continues to work toward dedicated and intentional strategies that reinforce and retain our creative class.”

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