Film production credit modification

A bill for an act

relating to economic development; modifying the film production credit; amending

Minnesota Statutes 2024, section 116U.27, subdivisions 1, 4, 5; Minnesota Statutes

2025 Supplement, section 116U.27, subdivision 2.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2024, section 116U.27, subdivision 1, is amended to read:

Subdivision 1.

Definitions.

(a) For purposes of this section, the following terms have

the meanings given.

(b) "Allocation
deleted text begin
certificate
deleted text end
new text begin
letter
new text end
" means a
deleted text begin
certificate
deleted text end
new text begin
letter
new text end
issued by the commissioner

to a taxpayer upon receipt and approval of an initial application for a credit for a project

that has not yet been completed.

(c) "Application" means the application for a credit under subdivision 4.

new text begin

(d) "Below-the-line crew position" means a position that handles the technical execution

of film production, including camera operators, sound technicians, grips, electricians, and

other specialized crafts positions.

new text end

deleted text begin

(d)
deleted text end

new text begin
(e)
new text end
"Credit certificate" means a certificate issued by the commissioner upon receipt

and approval of the cost verification report in subdivision 4, paragraph (e).

deleted text begin

(e)
deleted text end
new text begin
(f)
new text end
"Director" means the director of Explore Minnesota.

deleted text begin

(f)
deleted text end
new text begin
(g)
new text end
"Eligible production costs" means eligible production costs as defined in section

116U.26
, paragraph (b), clause (1), incurred in Minnesota that are directly attributable to

the production of a film project in Minnesota.

deleted text begin

(g)
deleted text end
new text begin
(h)
new text end
"Film" has the meaning given in section
116U.26
, paragraph (b), clause (2).

new text begin

(i) "Key creative role" means a project director, producer, showrunner, editor, actor,

writer, director of photography, production designer, cinematographer, or equivalent project

role.

new text end

new text begin

(j) "Minnesota script or screenplay production" means a script or screenplay created by

a Minnesota resident that is produced into a film.

new text end

deleted text begin

(h)
deleted text end
new text begin
(k)
new text end
"Project" means a film
new text begin
, including television programming
new text end
:

(1) that includes the promotion of Minnesota;

(2) for which the taxpayer has expended at least
deleted text begin
$1,000,000
deleted text end
new text begin
$400,000
new text end
in any consecutive

12-month period beginning after expenditures are first paid in Minnesota for eligible

production costs; and

(3) to the extent practicable, that employs Minnesota residents.

deleted text begin

Television commercials are exempt from the requirement under clause (1).

deleted text end

new text begin

Project also includes a television commercial or Minnesota script or screenplay production

for which the taxpayer has expended at least $150,000 in any consecutive 12-month period

beginning after expenditures are first paid in Minnesota for eligible production costs and,

to the extent practicable, that employs Minnesota residents.

new text end

deleted text begin

(i)
deleted text end
new text begin
(l)
new text end
"Promotion of Minnesota" or "promotion" means visible display of a static or

animated logo, approved by the director, that promotes Minnesota within its presentation

in the end credits for the life of the project.

Sec. 2.

Minnesota Statutes 2025 Supplement, section 116U.27, subdivision 2, is amended

to read:

Subd. 2.

Credit allowed.

new text begin
(a)
new text end
A taxpayer is eligible for a credit up to
deleted text begin
25
deleted text end
new text begin
40
new text end
percent of

eligible production costs paid in any consecutive 12-month period as described in subdivision

1, paragraph
deleted text begin
(h)
deleted text end
new text begin
(i)
new text end
. A taxpayer may only claim a credit if the taxpayer was issued a credit

certificate under subdivision 4.

new text begin

(b) A taxpayer is eligible for an additional five percent credit totaling up to 45 percent

if the project meets the requirements of paragraph (a), and:

new text end

new text begin

(1) employs a Minnesota resident in a key creative role;

new text end

new text begin

(2) films outside of the seven-county metro area, as defined in section 473.121,

subdivision 2; or

new text end

new text begin

(3) hires a majority of Minnesota residents in below-the-line crew positions.

new text end

Sec. 3.

Minnesota Statutes 2024, section 116U.27, subdivision 4, is amended to read:

Subd. 4.

Applications; allocations.

(a) To qualify for a credit under this section, a

taxpayer must submit to the director an application for a credit in the form prescribed by

the director, in consultation with the commissioner of revenue.

(b) Upon approving an application for a credit that meets the requirements of this section,

the director shall issue allocation
deleted text begin
certificates
deleted text end
new text begin
letters
new text end
that:

(1) verify eligibility for the credit;

(2) state the amount of credit anticipated for the eligible project, with the credit amount

up to
deleted text begin
25
deleted text end
new text begin
45
new text end
percent of eligible project costs; and

(3) state the taxable year in which the credit is allocated.

(c) The director must not issue allocation
deleted text begin
certificates
deleted text end
new text begin
letters
new text end
for more than $24,950,000

of credits each year. If the entire amount is not allocated in that taxable year, any remaining

amount is available for allocation for the four following taxable years until the entire

allocation has been made. The director must not award any credits for taxable years beginning

after December 31, 2030, and any unallocated amounts cancel on that date.

(d) The director must allocate credits on a first-come, first-served basis.

(e) Upon completion of a project, the taxpayer shall submit to the director a report

prepared by an independent certified public accountant licensed in the state of Minnesota

to verify the amount of eligible production costs related to the project. The report must be

prepared in accordance with generally accepted accounting principles. Upon receipt and

approval of the cost verification report and other documents required by the director, the

director shall determine the final amount of eligible production costs and issue a credit

certificate to the taxpayer. The credit may not exceed the anticipated credit amount on the

allocation
deleted text begin
certificate
deleted text end
new text begin
letter
new text end
. If the credit is less than the anticipated amount on the allocation

credit, the difference is returned to the amount available for allocation under paragraph (c).

To claim the credit under section
290.06
, subdivision 39, or
297I.20, subdivision 4
, a taxpayer

must include a copy of the credit certificate as part of the taxpayer's return.

Sec. 4.

Minnesota Statutes 2024, section 116U.27, subdivision 5, is amended to read:

Subd. 5.

Report required.

By January 15, 2025, the commissioner of revenue, in

consultation with the director, must provide a report to the chairs and ranking minority

members of the legislative committees with jurisdiction over economic development and

taxes. The report must comply with sections
3.195
and
3.197
, and must detail the following:

(1) the amount of credit certifications issued annually;

(2) the number of applications submitted, the number of allocation
deleted text begin
certificates
deleted text end
new text begin
letters
new text end

issued, the amount of allocation
deleted text begin
certificates
deleted text end
new text begin
letters
new text end
issued, the number of reports submitted

upon completion of a project, and the number of credit certificates issued;

(3) the types of projects eligible for the credit;

(4) the total economic impact of the credit in Minnesota, including the calendar year

over calendar year percentage changes in the number of jobs held by Minnesota residents

in businesses having a primary North American Industry Classification System code of

512110 as reported to the commissioner, for calendar years 2019 through 2023;

(5) the number of taxpayers per tax type which are assignees of credit certificates under

subdivision 3;

(6) annual Minnesota taxes paid by businesses having a primary North American Industry

Classification System code of 512110, for taxable years beginning after December 31, 2018,

and before January 1, 2024; and

(7) any other information the commissioner of revenue, in consultation with the director,

deems necessary for purposes of claiming and administering the credit.

Sec. 5.
new text begin
EFFECTIVE DATE.
new text end

new text begin

Sections 1 to 4 are effective July 1, 2026.

new text end