How Do Filmmakers Use a Tax Credit in Illinois?
The Illinois Film Production Tax Credit is a tangible financial tool that can help producers manage costs, attract investors, and strategically fund multiple phases of a project. The credit applies to qualifying in-state expenses, including crew wages, equipment, locations, and select post-production services, and can either offset taxes or be sold to generate cash.
Direct Application of the Tax Credit
A tax credit can act as real capital. For example, a production with $100,000 in qualifying expenses at 30 percent credit yields $30,000. This isn’t just theoretical—it can be used to fund ongoing costs or sold to secure immediate cash for the production.
Split-Production Strategy: Funding Post-Production
Imagine a short film that runs over budget in production or requires additional polish in post. By structuring the project in two phases, production and post-production, the producer can earmark in-state expenses in each phase. The tax credit generated during production can be monetized to cover editing, color grading, sound design, or VFX. This approach effectively bridges the gap when additional capital is needed, without relying solely on outside fundraising.
Providing Investor Value
Investors see the tax credit as a tangible, low-risk first step toward a return. By showing that part of the post-production budget is already secured through the credit, the producer reduces uncertainty and enhances the appeal of the project for outside funding.
Strategic Planning
Producers maximize the tax credit by prioritizing in-state expenses and mapping out expenditures between production and post-production. This careful planning ensures the credit works as a financial tool, supporting both creative goals and investor confidence.
While the Illinois Film Production Tax Credit is valuable to a filmmaker, the Illinois Film Office does not issue a credit return until the production is complete. And it’s still just a credit return used to offset tax liability in Illinois. Contacting us early can help you understand how to maximize the credit, strategically plan financing, and open opportunities to leverage it for both production and post-production phases.