New Jersey Film Production Spending Doubles as Studios Flee California for Tax Incentives

NEWARK, N.J. – As overall spending on film and television production fell 20% across the United States last year, New Jersey has emerged as an unlikely boomtown for the industry. A recent report from The Wall Street Journal highlights a dramatic shift, with major studios and production companies increasingly relocating from Hollywood to the Garden State, drawn by what is now considered the nation's most effective tax incentive program.

In 2023, 17 major film and television projects with budgets exceeding $10 million were shot in New Jersey, injecting nearly $1 billion in spending into the state's economy. This figure is roughly double the amount spent in the prior year, according to research firm ProdPro, signaling a significant migration of capital and jobs away from the industry's traditional hub in Los Angeles.

The appeal of a 35% or 40% tax credit is undeniable, especially for businesses in a high-cost industry like film production. However, in our experience, securing these benefits is far more complex than simply moving operations. Companies must meticulously structure their spending, vendor relationships, and hiring practices to meet New Jersey's stringent requirements, such as the 60% in-state spending threshold. A misstep in documentation or a failure to adhere to diversity plan commitments can jeopardize the entire credit. This is not just a location change; it's a significant financial and operational restructuring that demands expert oversight. We guide clients through these intricate state tax landscapes, ensuring every dollar spent is properly qualified. For businesses considering such a move, professional tax preparation and compliance is the first step, not an afterthought. C&S Finance Group LLC at csfinancegroup.com helps companies navigate these rules to fully realize the benefits of programs like New Jersey's.

The exodus from California is driven by studios' efforts to rein in costs, particularly for streaming service content, and to seek more favorable financial environments for big-budget features. New Jersey’s Film and Digital Media Tax Credit Program has positioned the state as the premier destination for these cost-conscious productions.

Administered by the New Jersey Economic Development Authority (NJEDA), the program offers a base tax credit of 30% to 35% on all qualified expenses. The 35% rate applies to goods and services used in eight designated southern counties or outside a 30-mile radius of Columbus Circle in Manhattan. To qualify, a production's expenses incurred in New Jersey must exceed $1 million, and at least 60% of the total production costs must be for services and goods purchased from vendors authorized to do business in the state.

The incentives can become even more lucrative. Production companies designated as "NJ studio or film-lease production companies" can earn a 40% credit on qualified wages and salaries. This designation requires site control of a production facility of at least 250,000 square feet for a minimum of 10 years. An additional 2% or 4% uplift is available for productions that implement a diversity plan approved by the NJEDA, rewarding good-faith efforts to meet diversity and inclusion goals in hiring.

Crucially for producers and their financial backers, these tax credits are transferable. This feature provides significant financial flexibility, allowing companies that may not have a large New Jersey tax liability to sell their credits to other businesses that do, effectively converting the credit into cash. The program has no cap on the amount of credit a single project can receive and is supported by a rolling annual fund of over $100 million.

The impact of this program is reshaping local economies across the state. The influx of large-scale productions, such as Starz’s “Power: Origins,” which is filming in Carlstadt for eight months, creates a ripple effect. It generates demand for a wide range of local small and mid-sized businesses, from catering and transportation to construction and equipment rental. The state is also seeing major infrastructure investments, including Netflix's planned state-of-the-art production facility in Monmouth County, which points to a long-term commitment from the industry.

Jon Crowley, Executive Director of the New Jersey Motion Picture and Television Commission, noted that the state's appeal rests on five key pillars: a variety of filming locations, a large and experienced workforce, expanding infrastructure, the commission's support, and the powerful financial incentives. This combination has proven effective at a time when the industry in Los Angeles is facing significant contraction.

As New Jersey's production industry continues to expand, other states may be forced to re-evaluate their own incentive programs to remain competitive. The success of the Garden State's aggressive tax credit strategy serves as a clear indicator that for the film and television industry, financial considerations are increasingly dictating where the cameras roll.