Production Tax Credits – A Michigan Lens

With Michigan contemplating reentry into the film and media production incentive landscape, it seems like a good time to visit the issue of production incentives. Michigan lawmakers have introduced the Multimedia Jobs Act (House Bills 4907 and 4908), a program designed to attract productions back to the state while capturing more of the benefits in the local economy than the previous iteration. With a 30% transferable tax credit on in-state production expenses and personnel, the revamped program would offer strong incentives for producers to choose Michigan as their shooting location.

What’s Different About Michigan’s New Proposed Program?

Michigan had the most attractive film incentive in the country beginning in the late 2000s, offering state-funded rebates up to 42% of a production budget’s qualified expenses. However, it was widely criticized for the structure of the program and its cost to taxpayers, which saw much of the benefits flowing out of state coffers into major studios and other out-of-state interests.  Since it was fully discontinued in 2015, Michigan has lagged much of the country in attracting entertainment productions.

The proposed Multimedia Jobs Act takes a more level-headed, structured approach to supporting projects designed to attract and retain talent in the entertainment industry, providing a 30% credit for in-state (Michigan resident) personnel, as well as a 20% credit for out-of-state workers.

The Act would offer a base 25% credit for qualified non-personnel production expenditures – such as equipment rentals, facilities, and post-production costs – with a 5% bonus if the distributed version of the content includes “Filmed in Michigan” or the “Pure Michigan” logo in the final version, functionally raising the credit to 30% for expenses incurred with Michigan vendors.

Additionally, credits are transferable rather than rebatable or refundable (more on that below).

The total state-wide program would include an initial annual cap of $125m, which could make applications competitive, especially later in the fiscal year.

What’s Covered and What’s Excluded?

As a producer, you want to know exactly what expenses you can count toward these credits. The new program applies to a wide range of production costs, but like every state, it has its limits. Here’s what would be covered in Michigan:

 Qualified Expenditures

 Above-the-line costs – Fees for key creative talent (e.g., directors, writers, producers), capped at $500,000 per person employed on the production.

 Below-the-line costs – Crew wages, including everything from camera operators and makeup artists to production assistants, are covered.

Post-production – Animation, visual effects, sound mixing, and other post-production vendors in Michigan.

Rental facilities and equipment – Costs for soundstages, locations, and equipment rentals in Michigan count toward the tax credit.

Travel and lodging – In-state travel and accommodation costs for cast and crew are eligible, including up to two round-trip flights per person to and from the state.

Catering and craft services – Food and beverage services provided by Michigan vendors during production qualify.

Exclusions

Development costs – Expenses related to acquiring intellectual property, developing scripts, or securing rights do not qualify.

Out-of-state purchases – Any goods or services purchased outside of Michigan are excluded.

Equipment purchases that retain value – If equipment purchased is not fully consumed during production, such as cameras or lighting rigs, it doesn’t qualify for the credit.

Non-production-related overhead – General administrative or corporate overhead not directly tied to production work is also excluded.

What About Commercial Production?

While film and television productions are obviously targets for Michigan’s incentive, marketers and commercial producers also stand to benefit. With a minimum spend of only $50,000 for commercials, the threshold is more accessible compared to many other states. This makes it an ideal program for advertisers and smaller productions looking to leverage high-quality production resources at a lower cost. Commercials could claim credits on the same range of expenses—crew wages, equipment rentals, post-production, and even travel within Michigan.

 Given Michigan’s diversity of landscapes, skilled workforce, and infrastructure, it’s an attractive destination for both narrative productions and commercial work. The program’s flexibility means that commercials, like larger productions, could tap into significant savings, keeping budgets competitive while still delivering high production values.

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Rebatable, Refundable, and Transferable Credits: What’s the Difference?

Rebatable credits (or rebates) are generally straightforward cash payments from the state based on eligible production expenses. Once expenditures are audited and approved, the state reimburses the production, regardless of the company’s tax liabilities.

Refundable credits allow productions to claim a cash refund from the state if their tax credit exceeds the amount of taxes owed from the state.  However, the refund only occurs after taxes are filed, any required audits are completed, and the state has reviewed the final paperwork. This process can take a long time (New York, I’m looking at you), which is why nearly every production still needs to borrow against the expected credit.

Transferable credits, as seen in Michigan’s proposed program, are not refunded by the state. Instead, productions can sell these credits to another company with tax liabilities in the state, lowering the amount the transferee owes.  This enables productions to get money upfront by selling the future credit at a discount, often with the help of an administrator/broker who facilitates the transaction.

What Are the Roles of Administrators, Brokers, and Lenders?

Navigating a tax credit program is rarely straightforward for film or commercial producers. Tax credits aren’t applied directly to your budget; instead, they are only realized after the production is complete and the bureaucratic process has run its course. This means producers typically need to rely on administrators and brokers to manage compliance and monetization. Here’s how they fit in:

Brokers play a key role in states that offer transferable credits, like Michigan’s proposed scheme. Transferable credits can be sold to other companies with large Michigan tax liabilities, allowing productions to monetize the credit (at a discount on the face value of the credit). Brokers help match sellers with buyers, negotiating the sale of the credit (at a slight discount and for a fee) to provide the production with liquidity rather than a tax benefit that the production likely isn’t structured to benefit from directly.  Matching productions that qualify for the credit with tax-planning buyers is critical in a non-refundable, transferable program like the one proposed in Michigan.

Administrators can be crucial to the process, especially for more complicated or new programs or producers without experience with a particular program. Some credit administrators may act as brokers as well (depending on the program and need), but they also offer advisory services, working with the production and counsel to help ensure that your production meets the legal, financial, and logistical requirements to claim the tax credit, helping with paperwork, eligibility, and overall compliance with state laws.

Lenders play a crucial role in bridging the time gap between production’s early cashflow needs and the realization of tax credits. Whether you’re planning to sell a transferable credit or assign the proceeds from a refundable or rebatable credit, productions invariably require cash flow earlier in the process. Lenders provide loans secured against the tax credit, giving productions the upfront capital they need. This financing is essential for keeping the production moving, especially given the direct monetization of tax credits – through sales, refunds, or rebates – can take years. By borrowing from lenders, producers can ensure they have the liquidity needed to complete their project without waiting for the tax credit process to play out.

Michigan’s Second Act

Michigan’s Multimedia Jobs Act presents a new opportunity for the state to attract media productions while avoiding the flaws of its previous program. With clear incentives for hiring local talent, a wide range of covered expenses, and a focus on keeping the financial benefits in-state, the proposed tax credit program is designed to everything from small commercials to major independent films.  Producers should be ready to navigate the complexities of tax credits by working with counsel experienced in production and finance, who can help build their finance plans and structure the cash flow the project requires. But with the right planning, Michigan is shaping up to be an excellent choice for your next project.