Massachusetts Film Tax Credit Incentive Program: The 25% No-Cap Credit That Sparked a $92 Million Production Boom
Before 2006, Massachusetts had beautiful locations, world-class universities, and a cinematic identity forged by films like “Good Will Hunting” and “Mystic River” but no financial reason for productions to actually film there instead of doubling Boston in Toronto or Atlanta. The passage of the Massachusetts Film Tax Credit changed that equation fundamentally, creating one of the most competitive and straightforward incentive programs in the United States. The result: $92.8 million in film tax credits issued in 2023 alone, Academy Award winners like “CODA,” “The Holdovers,” and “American Fiction” filmed on Massachusetts soil, and a production infrastructure that has matured from bare bones to professional-grade. For anyone working in the market from studio operators to freelancers providing Boston videographer services the Massachusetts film tax credit incentive program is the financial engine that makes it all possible.
How the Credit Works: Two Components, One Powerful Package
The Massachusetts film incentive operates through two complementary tax credits plus a sales tax exemption. The payroll credit equals 25 percent of total qualifying payroll for employees connected with filming and production in Massachusetts. The production expense credit equals 25 percent of Massachusetts production expenses, excluding payroll already calculated for the payroll credit. Combined, these credits effectively return 25 cents on every qualified dollar spent in the state.
The program’s design is notable for what it doesn’t include: there are no annual caps on total credits issued, no per-project caps, no residency requirements for crew, and no extended schedule of credit payouts. The minimum spending threshold is $50,000 in Massachusetts within a consecutive 12-month period to qualify for the payroll credit. To qualify for the production expense credit and sales tax exemption, productions must spend more than 75 percent of their total budget in Massachusetts or film at least 75 percent of their principal photography days in the state.
The Cash-Out Mechanism
One of the Massachusetts credit’s most producer-friendly features is its flexibility in monetization. Credits can be used directly to offset Massachusetts personal income tax or corporate excise liabilities. But since most production companies owe little in Massachusetts taxes, the program offers two additional options: the Commonwealth will refund 90 percent of any credit amount that exceeds the taxpayer’s liability, providing a guaranteed cash-out floor. Alternatively, credits can be transferred or sold to third parties typically banks, insurance companies, and corporations seeking to reduce their own Massachusetts tax obligations at market rates that have historically ranged between 80 and 90 percent of face value.
This dual cash-out mechanism means that productions receive real financial value from their credits regardless of their Massachusetts tax position. The 90 percent refund option provides certainty, while the open-market transfer option can sometimes yield higher returns depending on market conditions. Credits carry forward for five years, providing additional flexibility for multi-year production operations.
The Numbers: What $92.8 Million in Credits Looks Like
In 2023, Massachusetts issued tax credits to 250 film, television, and commercial productions the largest film industry subsidy in a given year since before the pandemic. Two projects alone accounted for over half of the total: the Marvel movie “Madame Web” qualified for approximately $23.7 million in credits, and the television miniseries “Dexter: New Blood” qualified for approximately $23 million. The Netflix film “Don’t Look Up,” partly filmed in Massachusetts, made headlines for receiving a record $46 million in state incentives.
These figures illustrate both the program’s success in attracting major productions and the concentration of credit dollars in a small number of large projects a pattern common across state incentive programs. The 250 qualifying productions, however, demonstrate that the program also supports a broad ecosystem of smaller projects, including commercials and independent films that benefit from the $50,000 minimum threshold.
The Oscar Pipeline
The most compelling argument for the Massachusetts credit’s effectiveness is the quality of the films it has attracted. Recent Academy Award winners and nominees filmed in the state include “CODA” (Best Picture), “The Holdovers” (multiple nominations, Da’Vine Joy Randolph winning Best Supporting Actress), “American Fiction,” “Manchester by the Sea” (Casey Affleck, Best Actor), and “Spotlight” (Best Picture). “Little Women,” “Knives Out,” “The Tender Bar,” and “Spirited” have all filmed extensively in Massachusetts. Emerson College graduates Daniel Kwan and Daniel Scheinert won Best Director for “Everything Everywhere All at Once.”
This concentration of critically acclaimed work does more than generate positive press it builds Massachusetts’ reputation as a location that attracts serious filmmakers making serious films. When a producer is deciding where to shoot their next prestige project, the knowledge that Alexander Payne chose to film “The Holdovers” in Massachusetts, that Greta Gerwig chose it for “Little Women,” and that the “Spotlight” team chose to film the Boston Globe investigation story in actual Boston carries significant weight.
The Debate and the Bottom Line
The Massachusetts film tax credit has faced criticism from economists and watchdog groups who argue that the program’s cost-per-job and net fiscal impact don’t justify the expenditure. Every dollar in film credits is a dollar not available for other state priorities. However, the program’s supporters point to the infrastructure, crew base, and creative economy that didn’t exist before the credit assets that are now self-sustaining to a significant degree. The FY22 budget made the credits permanent, removing the uncertainty of periodic reauthorization that had previously created hesitancy among both producers and studio investors.
For producers evaluating Massachusetts, the credit’s value proposition is clear: 25 percent back on qualified spending, no caps, straightforward requirements, reliable cash-out options, and a state that has demonstrated sustained political commitment to the program. Combined with Boston’s distinctive locations, four-season production calendar, and growing studio infrastructure, the financial case for filming in Massachusetts is as strong as it has ever been.
