Micro-Budget Productions & Film Grant Changes.

GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 2025
S 1
SENATE BILL 1002

Short Title: Micro-Budget Productions & Film Grant Changes. (Public)
Sponsors: Senator Lee (Primary Sponsor).
Referred to: Rules and Operations of the Senate
May 4, 2026
*S1002-v-1*
A BILL TO BE ENTITLED 1
AN ACT TO MODIFY THE FILM AND ENTERTAINMENT GRANT FUND. 2
The General Assembly of North Carolina enacts: 3
SECTION 1. G.S. 143B-437.02A reads as rewritten: 4
"§ 143B-437.02A. The Film and Entertainment Grant Fund. 5
(a) Creation and Purpose of Fund. – There is created in the Department of Commerce a 6
special, nonreverting account to be known as the Film and Entertainment Grant Fund to provide 7
funds to encourage the production of motion pictures, television shows, movies for television, 8
productions intended for on -line distribution, and commercials and to develop the filmmaking 9
industry within the State. The Department of Commerce shall adopt guidelines providing for the 10
administration of the program. Those guidelines may provide for the Secretary to award the grant 11
proceeds over a period of time, not to exceed three years. Those guidelines shall include the 12
following provisions, which shall apply to each grant from the account: 13
(1) The funds are reserved for a production on which the production company has 14
qualifying expenses of at least the following: 15
… 16
b. For a production consisting of a series of episodes intended for on-line 17
distribution or a television series, five hundred thousand dollars 18
($500,000) per episode. 19
… 20
(2) The funds are not used to provide a grant in excess of any of the following: 21
a. An amount more than twenty -five percent (25%) of the qualifying 22
expenses for the production. 23
b. An amount more than seven million dollars ($7,000,000) twenty 24
million dollars ($20,000,000) for a feature-length film, film or a single 25
season of a production consisting of a series of episodes intended for 26
on-line distribution, more than fifteen million dollars ($15,000,000) 27
twenty-five million dollars ($25,000,000) for a single season of a 28
television series, or two hundred fifty thousand dollars ($250,000) for 29
a commercial for theatrical or television viewing or on -line 30
distribution. The amount of a grant for the first season of a series, when 31
added to any grant awarded for the pilot episode of that series, may not 32
exceed twenty-five million dollars ($25,000,000). 33
(3) The funds are not used to provide a grant to more than one production 34
company for a single production. 35
General Assembly Of North Carolina Session 2025
Page 2 Senate Bill 1002-First Edition
(4) The funds are not used to provide a grant for a production that meets one or 1
more of the following: 2
… 3
f. It is a talk, game, talk show, recorded concert or other live performance 4
event for theatrical or other release, or awards show or other gala 5
event. For purposes of this exception, an awards show is television 6
programming involving the filming of a ceremony in which 7
individuals, groups, or organizations are given an award. 8
… 9
(b) Definitions. – The following definitions apply in this section: 10
… 11
(3) Highly compensated individual. – An individual who directly or indirectly 12
receives compensation in excess of one million dollars ($1,000,000) four 13
million dollars ($ 4,000,000) for personal services with respect to a single 14
production. An individual receives compensation indirectly when a 15
production company pays a personal service company or an employee leasing 16
company that pays the individual. 17
… 18
(5) Production. – Any of the following: 19
a. A motion picture intended for commercial distribution to a motion 20
picture theater or directly to the consumer viewing market that has a 21
running time of at least 75 minutes. 22
b. A television series or a commercial for theatrical or television viewing, 23
made-for-television movie, or production intended for on -line 24
distribution. For video and a television series, a production is all of the 25
episodes of the series produced for a single season. For a production 26
intended for on -line distribution, the production is all the episodes 27
produced for a single calendar year, provided there are at least six 28
episodes with an average running time of at least 20 minutes. 29
(6) Production company. – Defined in G.S. 105-164.3.A person engaged in the 30
business of making original motion pictures or video content for theatrical , 31
commercial, advertising, or educational purposes. 32
(7) Qualifying expenses. – The sum of the amounts listed in this subdivision, 33
substantiated pursuant to subsection (d) of this section, and spent in this State 34
by a production company in connection with a production, less the amount 35
paid in excess of one million dollars ($1,000,000) four million dollars 36
($4,000,000) to a highly compensated individual: 37
a. Goods and services leased or purchased. For goods with a purchase 38
price of twenty -five thousand dollars ($25,000) or more, the amount 39
included in qualifying expenses is the purchase price less the fair 40
market value of the good at the time the production is completed. 41
Goods and services includes the costs of tangible and intangible 42
property used for, and services performed primarily and customarily 43
in, production, including preproduction and postproduction and other 44
direct costs of producing the project in accordance with generally 45
accepted entertainment industry practices. Goods and services exclude 46
costs the following: 47
1. Costs for development, marketing, and distribution; costs 48
distribution. 49
General Assembly Of North Carolina Session 2025
Senate Bill 1002-First Edition Page 3
2. Costs of financing for the production, of bonding related to the 1
production, of production-related insurance coverage obtained 2
on the production; and expenses production. 3
3. Expenses for insurance coverage purchased from a related 4
member. 5
4. For game shows and productions that document purportedly 6
unscripted real -life situations primarily using unfamiliar 7
people in lieu of professional actors, (i) costs for and value of 8
prizes awarded and (ii) the fair market value of any item in the 9
show intentionally or negligently used or destroyed for 10
entertainment purposes immediately prior to its destruction or 11
use. 12
… 13
(h) Micro-Budget Productions Account. – There is created in the Film and Entertainment 14
Grant Fund a special, nonreverting account to be known as the Micro-Budget Productions 15
Account to provide funds to encourage smaller productions to develop the filmmaking industry 16
within the State. The Departm ent of Commerce shall adopt guidelines providing for the 17
administration of the program. Those guidelines shall apply to each grant from the account and 18
shall adhere to the provisions in this section, with the following modifications: 19
(1) The funds are reserved for a production on which the production company has 20
qualifying expenses of at least fifty thousand dollars ($50,000) in the State but 21
not more than one million four hundred ninety -nine thousand dollars 22
($1,499,000) for the production. 23
(2) The funds are not used to provide a grant in excess of (i) a base amount equal 24
to the lesser of twenty percent (2 0%) of the qualifying expenses for the 25
production or one hundred thousand dollars ($100,000) plus (ii) any of the 26
following: 27
a. A bonus amount equal to five percent (5%) of the base amount if the 28
production company provides qualified accounting showing at least 29
seventy-five percent (75%) of the compensation and wages paid for 30
the production was paid to North Carolina residents . For purposes of 31
this sub -subdivision, "qualified accountin g" by the production 32
company includes both (i) withholding payments remitted to the 33
Department of Revenue under Article 4A of Chapter 105 of the 34
General Statutes and (ii) payments for compensation to independent 35
contractors reported using a Form 1099. In calculating whether the 36
required percentage has been met, the following shall be included in 37
compensation and wages : e mployee fringe contributions, including 38
health, pension, and welfare contributions; per diems, stipends, and 39
living allowances paid for work being performed in this State ; and 40
payments made to a loan -out company for services provided in the 41
State. 42
b. A bonus amount equal to (i) three percent (3%) if at least seventy-five 43
percent (75%) of the filming occurred in development tier two and one 44
areas or (ii) five percent (5%) if at least seventy-five percent (75%) of 45
the filming occurred in a development tier one area. For purposes of 46
this sub -subdivision, a "development t ier area " is as defined in 47
G.S. 143B-437.08. 48
(3) The funds are reserved for a production for which at least seventy-five percent 49
(75%) of the filming occurred in the State by or with a production company 50
with company headquarters, as defined in G.S. 143B-437.01, in this State. 51
General Assembly Of North Carolina Session 2025
Page 4 Senate Bill 1002-First Edition
(4) The funds are not contingent on the existence , proof, or guarantee of a 1
distribution agreement. 2
(5) A production is not limited to feature -length films, television series, or 3
commercials but can consist of short films, documentar ies, or other similar 4
audiovisual works intended for distribution that meet the requirements of this 5
subsection. 6
(6) No grant may be awarded that, when considered together with other grants 7
awarded during a single calendar year, could cause the State 's potential total 8
annual liability for grants awarded in a single calendar year to exceed the 9
amount available in the Account." 10
SECTION 2. There is appropriated from the General Fund to the Department of 11
Commerce the sum of one million five hundred thousand dollars ($1,500,000) in nonrecurring 12
funds beginning in the 2026 -2027 fiscal year to the Micro -Budget Productions Account 13
established in Section 1 of this act for purposes consistent with that Account. 14
SECTION 3. This act becomes effective July 1, 2026, and applies to grants made on 15
or after that date. 16