KRS 154.61-020: Purposes -- Tax incentives for motion pictures and entertainment

productions and continuous film productions.

(1) The purposes of KRS 141.383 and this subchapter are to encourage:

(a) The film and entertainment industry to choose locations in the

Commonwealth for the filming and production of motion picture or

entertainment productions;

(b) The development of a film and entertainment industry in Kentucky;

(c) Increased employment opportunities for the citizens of the Commonwealth

within the film and entertainment industry; and

(d) The development of a production and postproduction infrastructure in the

Commonwealth for film production and touring Broadway show production

facilities containing state-of-the-art technologies.

(2) The council, together with the Department of Revenue, shall administer the tax

credit established by KRS 141.383, this section, and KRS 154.61-030.

(3) To qualify for the tax incentive provided in subsection (5) of this section, the

following requirements shall be met:

(a) For an approved company that films or produces a commercial in whole or in

part in the Commonwealth, the minimum combined total of qualifying

expenditures and qualifying payroll expenditures shall be two hundred

thousand dollars ($200,000); and

(b) For an approved company that is also a Kentucky-based company that:

1. Films or produces a feature -length film, television program, industrial

film, video game, or music video in whole or in part in the

Commonwealth, the minimum combined total of qu alifying

expenditures and qualifying payroll expenditures shall be two hundred

thousand dollars ($200,000);

2. Produces a national touring production of a Broadway show in whole or

in part in the Commonwealth, the minimum combined total of

qualifying expenditures and qualifying payroll expenditures shall be

twenty thousand dollars ($20,000); or

3. Films or produces a documentary in whole or in part in the

Commonwealth, the minimum combined total of qualifying

expenditures and qualifying payroll expenditures shall be ten thousand

dollars ($10,000); and

(c) For an approved company that is not a Kentucky-based company that:

1. Films or produces a feature -length film, television program, industrial

film, video game, or music video in whole or in part in the

Commonwealth, the minimum combined total of qualifying

expenditures and qualifying payroll expenditures shall be fo ur hundred

thousand dollars ($400,000); or

2. Films or produces a documentary in whole or in part in the

Commonwealth or that produces a national touring production of a

Broadway show, the minimum combined total of qualifying

expenditures and qualifying pa yroll expenditures shall be twenty

thousand dollars ($20,000).

(4) (a) Beginning on January 1, 2022, the total tax incentive approved under KRS

141.383 and this subchapter shall be limited to seventy -five million dollars

($75,000,000) for calendar year 2022 and each calendar year thereafter.

(b) Beginning with calendar year 2024:

1. Twenty-five million dollars ($25,000,000) shall be allocated for all

approved companies with a continuous film production; and

2. On the first day of July of each calendar year, any unused balance of the

amount allocated under subparagraph 1. of this paragraph for continuous

film productions shall be made available for all approved companies

with motion picture or entertainment productions.

(c) Beginning with calendar year 2026, any unallocated balance of the amount

allocated in paragraph (a) of this subsection for the previous calendar year

shall carry forward into the subsequent calendar year to be made available for

approved companies with high -impact motion pictures, continuou s film

productions, or entertainment productions. The council shall promulgate

administrative regulations in accordance with KRS Chapter 13A to establish

the criteria for a high-impact motion picture or entertainment production.

(5) (a) To qualify for the tax incentive available under KRS 141.383 and this

subchapter, all applicants shall:

1. Begin filming or production in Kentucky within one hundred eighty

(180) days of approval by the council;

2. Complete filming or production in Kentucky within two (2) ye ars of the

filming or production start date; and

3. Submit a certified audit to the office.

(b) The tax credit shall be against the Kentucky income tax imposed under KRS

141.020 or 141.040, and the limited liability entity tax imposed under KRS

141.0401, and shall be refundable as provided in KRS 141.383.

(c) 1. For a continuous film production filmed or produced in any Kentucky

county, or a feature -length film, television program, industrial film,

documentary, video game, music video, or national touring p roduction

of a Broadway show filmed or produced in its entirety in a heritage

county, the amount of the incentive shall be equal to thirty -five percent

(35%) of the approved company's:

a. Qualifying expenditures;

b. Qualifying payroll expenditures paid to resident and nonresident

below-the-line production crew; and

c. Qualifying payroll expenditures paid to resident and nonresident

above-the-line production crew not to exceed one million dollars

($1,000,000) in payroll expenditures per employee.

2. a. To the extent the approved company films or produces a motion

picture or continuous film production in part in a heritage county

and in part in a Kentucky county that is not a heritage county, the

approved company shall be eligible to receive the incentives

provided in this paragraph for those expenditures incurred in the

heritage county and all other expenditures shall be subject to the

incentives provided in paragraph (d) of this subsection.

b. The approved company shall track the requisite expenditures by

county. If the approved company can demonstrate to the

satisfaction of the cabinet that it is not practical to use a separate

accounting method to determine the expenditures by county, the

approved company shall determine the correct expenditures by

county using an alternative method approved by the cabinet.

(d) For a commercial filmed or produced in any Kentucky county, or a feature -

length film, television program, industrial film, documentary, video game,

music video or national touring production of a Broad way show filmed or

produced in whole or in part in any Kentucky county other than in a heritage

county, the amount of the incentive shall be equal to:

1. Thirty percent (30%) of the approved company's:

a. Qualifying expenditures;

b. Qualifying payroll expenditures paid to below -the-line production

crew that are not residents; and

c. Qualifying payroll expenditures paid to above -the-line production

crew that are not residents, not to exceed one million dollars

($1,000,000) in payroll expenditures per employee; and

2. Thirty-five percent (35%) of the approved company's:

a. Qualifying payroll expenditures paid to resident below -the-line

production crew; and

b. Qualifying payroll expenditures paid to resident above -the-line

production crew not to exceed one million dollars ($1,000,000) in

payroll expenditures per employee.