New Georgia Law Limits Film Tax Credits. But Marvel Would Still Qualify.

While the state senate's bill would cap tax credits at 2.3 percent of the state's budget, any production filming at a big enough studio would be exempt.

In February, Reason reported that Georgia lawmakers were considering modest changes to the state's film and television tax credits. So far, the state senate is backing off even those meager modifications.

For more than a decade, films or TV shows that filmed in Georgia and spent at least $500,000 in the state could qualify for a 20-percent tax credit; putting a "Made in Georgia" logo on the final product would boost the credit to 30 percent. Last year, the state certified $1.24 billion in production tax credits.

Auditors routinely find the production credit program to be a waste of money: Most recently, a 2023 audit conducted by Georgia State University's Fiscal Research Center found that "net job creation is negative" as a result of the credits, and that each job created as a result of the program costs state taxpayers $160,000.

State law also allows the credits to be transferred, and production companies based in California pay very little in Georgia income taxes. As a result, the vast majority of recipients sell the credits: According to The Atlanta Journal-Constitution, 97 percent of credits are sold by film companies, mostly to individuals who use them to offset their own tax liability.

For example, if a studio spends $1 million on a film shoot in Georgia, it could qualify for a $300,000 tax credit, but since the company likely won't owe that much in Georgia taxes, it can sell that credit to someone else and bank the proceeds. State law even requires that any transferred credit be sold for at least 60 percent of face value, so the production company would net $180,000, and the buyer would get a $300,000 credit that he could carry forward for up to three years.

Last month, four state Republican lawmakers announced that there would be changes to the program. They suggested doubling the minimum investment to $1 million and capping the amount of credits that could be sold at 2.5 percent of the previous year's state budget.

While these changes are modest—2.5 percent of last year's budget would still be over $900 million—the state legislature has included language to render them effectively meaningless.

The state House passed H.B. 1180 at the end of February. The bill inserted a provision that the "total amount" of transferred credits "in a calendar year shall not exceed an amount equal to 2.5 percent of the total budget in the General Appropriations Act as passed and signed into law for the corresponding fiscal year."

Last week, a different version of H.B. 1180 cleared the state Senate Finance Committee. This version lowered the cap from 2.5 percent to 2.3 percent, but it also included a notable exception. The Senate bill exempts any productions shooting at a studio sound stage facility "that was substantially completed between January 1, 2023, and June 30, 2027" and cost "in excess of $100 million" to build, or "that has more than 1.5 million square feet of stage space."

That would exempt the biggest and most expensive productions and render the caps moot. Atlanta's Trilith Studios, the largest studio complex in the state, contains 1.5 million square feet of studio space; Marvel's Avengers films and TV series and the upcoming Superman film are shot there, each of which costs hundreds of millions of dollars.

"I can't imagine anybody reaching the cap under the version we have," said state Senate Finance Chairman Chuck Hufstetler (R–Rome).

It makes perfect sense for legislators to feel like changing a law that causes state taxpayers to subsidize billion-dollar companies, especially when those companies turn around and sell the subsidies for cash. But in that case, they should fully commit, if not by scrapping the program altogether then at least by imposing a meaningful cap that doesn't exempt the biggest participants.