Bill
SF 4634
The bill expands the Minnesota film credit to 40% base (up to 45% with incentives) and lowers the eligible cost threshold, broadening projects and boosting local hiring, especially
Purpose and overall intent
- SF 4634 seeks to modify Minnesota’s film production tax credit program (as established in Minn. Stat. § 116U.27) to increase credit generosity and adjust eligibility and administration.
- Key aims appear to be (a) expanding the eligible credit percentage, (b) broadening project definitions to include more Minnesota-focused productions, and (c) refining the allocation, verification, and reporting processes to improve administration and transparency.
- Effective date: Sections 1–4 would take effect July 1, 2026.
Main provisions and changes
1) Definitions and project scope (Sec. 1)
- Adds and clarifies several definitions:
- “Below-the-line crew position”: covers technical production roles (camera operators, sound techs, grips, electricians, etc.).
- “Credit certificate”: certificate issued after cost verification report approval.
- “Director”: now defined as the director of Explore Minnesota.
- “Eligible production costs”: as defined in existing statute, incurred in Minnesota and directly attributable to the Minnesota production.
- “Key creative role”: includes project director, producer, showrunner, editor, actor, writer, director of photography, production designer, cinematographer, or equivalent.
- “Minnesota script or screenplay production”: a script created by a Minnesota resident that is produced into a film.
- “Project”: broadens to include films and television programming that promote Minnesota; requires substantial Minnesota expenditures and, to the extent practicable, Minnesota resident employment. The project threshold is changed (see below). Also expands promotion to include visible Minnesota promotion in end credits.
- Threshold for qualification (redefined in (1)(k)/(l) text):
- Previously: at least $1,000,000 in eligible production costs in a consecutive 12-month period.
- Now: at least $400,000 in any consecutive 12-month period, after expenditures first paid in Minnesota, for eligible production costs.
- Additionally, for television commercials and Minnesota-script productions, a lower threshold: at least $150,000 in a 12-month period, with similar residency considerations.
- Promotion definition retained as end-credit Minnesota promotion.
2) Credit percentage and enhancement (Sec. 2)
- Base credit: eligible production costs may receive up to 40% credit (previously 25%).
- Additional 5% credit (total up to 45%) if all of the following are met:
- Employs a Minnesota resident in a key creative role.
- Films outside the seven-county metro area (as defined by statute).
- Hires a majority of Minnesota residents in below-the-line crew positions.
- Net effect: potential maximum credit moves from 25% to 40%, with a possible 45% total under specific conditions.
3) Application and allocation process (Sec. 3)
- Applications: filmmakers must file with the director (in consultation with the Commissioner of Revenue) using a prescribed form.
- Allocation letters (previously allocation certificates): issued to verify eligibility, with stated anticipated credit amount (up to 45% of eligible costs) and the taxable year of allocation.
- Annual cap: director may allocate up to $24,950,000 of credits per year. Unallocated funds remain available for the next four taxable years; final sunset for new awards is December 31, 2030.
- First-come, first-served allocation.
- Cost verification: after project completion, an independent Minnesota-licensed CPA must verify eligible costs using GAAP. The director issues a final credit certificate based on verified costs, not to exceed the anticipated allocation. Shortfalls are returned to the pool for other allocations.
- Credit filing: to claim credits on state tax returns, taxpayers must include the final credit certificate.
4) Reporting requirements (Sec. 4)
- By January 15, 2025, the Department of Revenue (in consultation with the director) must report to key legislative chairs/ranking members. The report must cover:
- Annual credits issued and corresponding metrics (applications, certificates, reports, etc.).
- Types of eligible projects.
- Economic impact, including employment data for Minnesota residents in film-related industries (NAICS 512110) and year-over-year trends 2019–2023.
- Taxpayers assignees of credits and overall Minnesota tax data for relevant film industry taxpayers.
- Any other information necessary to administer the credit.
5) Effective date (Sec. 5)
- Sections 1–4 take effect July 1, 2026.
Who is affected
- Minnesota-based film and television production companies applying for the credit.
- Producers, directors, writers, editors, showrunners, cinematographers, production designers, and other key creative and below-the-line crew working on Minnesota projects.
- Minnesota residents employed in eligible productions, with emphasis on geographic distribution (metro vs. non-metro) and local hiring.
- Explore Minnesota (as administrator of certain definitions and criteria).
- The Department of Revenue and the state director (economic development) for administration and reporting.
Impact considerations
- Increased potential credit percentage (up to 45%) could incentivize more Minnesota-focused productions and hiring of Minnesota residents, particularly in key creative roles and non-metro areas.
- Lower project cost thresholds could broaden the universe of eligible projects, including smaller productions and Minnesota-script-based works.
- Administrative safeguards (cost verification by Minnesota-licensed CPAs; annual caps; transparent reporting) aim to balance growth with fiscal oversight.
- The bill would require implementation readiness in mid-2026, with a multi-year allocation window and ongoing reporting.
Compiled from official sources — confirm details with the bill’s official record.
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