Bill
HB 2038
Kansas creates a state program offering income tax credits up to $10 million annually to incentivize film, digital media production in Kansas, with added bonuses and sales tax exem
Status / Procedural
- Introduced: January 23, 2025.
- Hearing: Tuesday, February 4, 2025, 3:30 PM — Room 346‑S.
- Sponsor: Committee on Commerce, Labor and Economic Development (requested by Grow Kansas Film).
- Fiscal note prepared by Kansas Division of the Budget (Feb 4, 2025).
Purpose
- Establishes a state program to incentivize film, video and digital media production in Kansas and to support growth of an in‑state production industry and related businesses.
Program structure and administration
- Creates the Kansas Film and Digital Media Industry Development Program in the Department of Commerce, assisted by the Kansas Creative Arts Industries Commission.
- Secretary of Commerce certifies eligible projects and issues annual reports to specified legislative committees.
- Departments of Commerce and Revenue may adopt rules to implement the Act.
Key provisions — tax incentives
- Annual cap: income tax credits approved by Commerce limited to $10.0 million per tax year. At least 10% of approved credits each year must go to Kansas‑based production companies.
- Base credit: eligible production companies may receive a 30% income tax credit on “qualified production” and certain postproduction expenditures (minimum eligible expense generally $50,000).
- Enhanced credits: Secretary may add up to three separate 5% bonus increases (each) — e.g., for certified multi‑film deals, eligible TV series, certified high‑impact productions, contributions to infrastructure/workforce development, for productions with ≥50% Kansas crew/above‑the‑line personnel, and for repeat recipients. Total credit for a project is capped at 40% of qualified expenditures in a taxable year.
- Lower threshold / smaller productions: Kansas‑based companies with at least $25,000 in qualified expenditures on projects not intended for multimarket distribution may qualify for a 25% credit.
- Transferability: credits may be transferable under certain conditions. Unused credits may be carried forward up to 10 years.
Sales tax exemption
- Exempts sales tax on tangible personal property and services purchased for certified projects, and extends exemptions to contractors for construction/reconstruction/enlargement/remodeling tied to a certified project.
- Contractors must report use of exemption; misuse can be a misdemeanor. Contractors must remit sales/use tax for materials not used or returned; failure to pay can make the production company liable.
Definitions / eligibility highlights
- Broadly defines “eligible production” to include feature films, documentaries, series, pilots, music videos, video games, VR/AR/multimedia/new media, streaming content, etc., intended for multimarket commercial distribution.
- Excludes news/athletic coverage, local advertising, corporate videos, and obscene material.
- “High‑impact production” defined (e.g., $50 million+ in expenditures with specified qualifying thresholds).
Fiscal and other impacts (per fiscal note)
- Estimated State General Fund reduction: $10.0 million in FY2026 and each fiscal year thereafter through FY2035 (assumes full $10M cap awarded annually).
- Sales tax exemption impact: not estimated (insufficient data). May reduce local sales tax receipts; potential offset from economic development is uncertain.
- Kansas Department of Revenue implementation cost: $170,855 (FY2026) for system modifications; additional contractor programming could be needed if workloads exceed resources.
- Kansas Department of Transportation: potential (unknown) reduction to State Highway Fund revenues; could affect transportation project funding.
- Program provisions (sales and income tax incentives) include a sunset provision to expire prior to January 1, 2035.
Reporting and accountability
- Annual Commerce report to House and Senate commerce and taxation committees must include amounts and recipients of incentives, anticipated amounts, applicants and certified projects, descriptions of ongoing/completed projects, and program impact on Kansas industry and workforce.
Who is affected
- Film, television, digital media and related production companies (Kansas‑based and out‑of‑state).
- Vendors, contractors, crew and above‑the‑line personnel working on certified projects.
- State General Fund, potentially local governments (sales tax), and the State Highway Fund (indirectly).
Notes
- The fiscal note assumes full utilization of the $10M annual credit cap; actual fiscal effects will vary with program uptake.
- The bill contains multiple technical eligibility and administrative details; applicants must be certified by the Department of Commerce to claim benefits.
Compiled from official sources — confirm details with the bill’s official record.
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