25% Refundable Production Tax Credit
for Filming on Kauai

The Motion Picture, Digital Media, and Film Production Income Tax Credit is a refundable tax credit based on a production company's Hawaii expenditures while producing a qualified film, television, commercial, or digital media project.

What is the tax credit?

• The credit is calculated as a percentage of "qualified production costs" incurred in Hawaii
• The credit is deductible from the Hawaii taxpayer's net income tax liability for the taxable year in which the credit is properly claimed
• If the credit exceeds net income tax liability, the excess of credits over liability shall be refunded to the taxpayer
• The credit is effective July 1, 2006 through December 31, 2015
• The credit is administered by the Hawaii Film Office and the Hawaii State Department of Taxation

How much is the tax credit?

• 15% of total "qualified production costs" incurred while filming on Oahu
• 20% of total "qualified production costs" incurred while filming on a neighbor island (Big Island, Kauai, Lanai, Maui, Molokai)
• There is an $8 million cap per "qualified production"

Who is eligible for the tax credit?

A company that produces a "qualified production" that spends a minimum of $200,000 in "qualified production costs" in Hawaii, and belongs to one of the following categories:

• Feature film (narrative, documentary, experimental, student)
• Short film (narrative, documentary, experimental, student)
• Television movie
• Commercial (an advertising message filmed within 6 consecutive weeks in Hawaii for dissemination via television broadcast or theatrical distribution)
• Music video
• Interactive game
• Television series pilot
• Single season (up to 22 episodes) of a television series regularly filmed in the state (if the number of episodes per single season exceeds 22, additional episodes for the same season shall constitute a separate "qualified production")
• Television special
• Single television episode that is not part of a TV series regularly filmed or based in the state
• National magazine show
• National talk show

Which "qualified production costs " are used in calculating the credit amount?

"Qualified production costs" must meet all of the following requirements:

• Costs that are incurred in Hawaii
• Costs that are subject to Hawaii's general excise tax or income tax
• Costs that have not been financed by investments for which an Act 221 investment tax credit was or will be claimed
• Costs that belong to the following categories:
  1. Costs incurred during preproduction such as location scouting and related services
  2. Costs of set construction and operations, purchases or rentals of wardrobe, props, accessories, food,
  3. ice supplies, transportation, equipment, and related services
  4. Wages or salaries of cast, crew, and musicians
  5. Costs of photography, sound synchronization, lighting, and related services
  6. Costs of editing, visual effects, music, other post-production, and related services
  7. Rentals and fees for use of local facilities and locations
  8. Rentals of vehicles and lodging for cast and crew
  9. Airfare for flights to or from Hawaii, and interisland flights
  10. Insurance and bonding
  11. Shipping of equipment and supplies to or from Hawaii, and interisland shipments

Are there additional requirements for claiming the tax credit?

• During development or pre-production, a "qualified production" must register with the Hawaii Film Office to get precertified for the credit
• During production, a "qualified production" must:
  • Demonstrate reasonable efforts to hire local talent and crew
  • Provide evidence of financial or in-kind contributions or educational or workforce development efforts, in partnership with related local industry labor organizations, educational institutions, or both, toward the furtherance of the local film and television and digital media industries
• After production wraps, a "qualified production" must:
  • Provide a detailed report of "qualified production costs" and activity in Hawaii to the Hawaii Film Office
  • Provide a screen credit to the State of Hawaii

Who is NOT eligible for the tax credit?

• Productions that have been financed by investments for which an Act 221 investment tax credit was or will be claimed
• Productions that belong to the following categories:
  • Daily news
  • Public affairs programs
  • Non-national magazine or talk shows
  • Televised sporting events or activities
  • Productions that solicit funds
  • Productions produced primarily for industrial, corporate, institutional, or other private purposes
  • Advertising with internet-only distribution
  • Pornography

How is the credit claimed?

• During development or pre-production, a "qualified production" must register with the Hawaii Film Office to get precertified for the credit
• After production wraps, a "qualified production" must provide a detailed report of "qualified production costs" and activity in Hawaii to the Hawaii Film Office
• If approved, the Hawaii Film Office will file a letter with the Department of Taxation certifying the amount of the credits, and provide a copy to the production company
• The production company must then attach the letter when filing the following forms: (1) Hawaii State Income Tax Return and (2) Form (#TBD) Motion Picture, Digital Media, and Film Production Income Tax Credit, with the Hawaii State Department of Taxation, within one year following the close of the taxable year that the production filmed in Hawaii.

Legislative and Tax References:

• Statute: Act 88 (Senate Bill 2570, Conference Draft 1)
• General: Department of Taxation

For more information, please see the Kauai Film Commission website and the Hawaii State Film Commission website.