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July 3, 2024
The Broadway Tax Credit
Broadway, the heart of New York City's theater district, isn't just a street; it's a dazzling collection of stages, where stories come alive in vibrant productions! As an important economic driver for the city and state and in reaction to the slowdown that it experienced because of the COVID-19 pandemic, the New York State government introduced a tax credit to encourage more theatrical and musical productions to make Broadway home. This blog post explores the key features of NYC Musical and Theatrical Tax Credit.
What is the NYC Broadway Tax Credit?
The $300 million refundable tax credit program is designed to jump-start the entertainment industry and support tourism in New York City. The Program was implemented to provide economic incentives to theatrical production in NYC and to offset some of the additional costs associated with producing a show as New York’s economy continues to recover from the Covid-19 pandemic. Each Broadway (Level 1 facilities) and Off-Broadway (Level 2 facilities) production is entitled to a tax credit of 25% of qualified production expenses; Broadway shows are capped at $3 million while Off-Broadway shows are capped at $350,000.
Key Features of the Tax Credit
Eligibility- To be eligible for the incentive, the production must be a live, scripted performance with one or multiple performers that, in its original or adaptive version, is performed in a Level 1 Qualified New York city production facility or a Level 2 qualified production facility in New York City.
○ Level 1 facilities are defined as venues (i) in Manhattan in the area bounded by and including 41st Street, 54th Street, 6th Avenue and 9th Avenue, (ii) in which live theatrical productions are intended primarily to be presented, (iii) containing five hundred seats or more along with at least one stage and additional necessary amenities for theatrical productions, and (iv) for which live theatrical productions constitute 75% or more of gross receipts for the facility.
○ Level 2 facilities are defined venues (i) in Manhattan, (ii) in which live theatrical productions are intended to be primarily presented, (iii) containing one hundred seats or more along with at least one stage and additional necessary amenities for theatrical productions, and (iv) for which live theatrical productions constitute 75% or more of gross receipts for the facility.
Costs Covered- The credit covers the following costs:
○ Production costs for sets, costumes, wardrobes, makeup, accessories and costs associated with sound, lighting and staging;
○ Salaries, wages, fees, and other compensation, including related benefits for services performed. Total allowable expenses are not to exceed $200,000 per week;
○ Technical and crew production costs, such as expenditures for qualified production facilities; and
○ Up to 50% of the advertising and marketing costs incurred and paid in NYS by the applicant.
Credit Period- The credit covers cost from 12 weeks prior to the start of the production until the earliest of the following dates:
○ The production closes,
○ The credit cap has been reached, or
○ September 30, 2025 (the sunset date for the program).
Since productions started to reap the benefit of the tax credit in January 2021, the Broadway Tax Credit has become a vital tool in supporting one of New York's most beloved and economically significant industries. By alleviating some of the financial pressures on productions, it helps sustain the jobs, tourism, and cultural richness that Broadway brings to New York City. Furthermore, producers are able to use the tax credit as an asset to collateralize loans for operating costs. Similar to other tax credits in the entertainment industry, this allows the producer options when building the production’s financial outlook.
Opportunities abound when producers include tax credits and other soft money incentives as a portion of their finance plan. Give us a call if you’d like to explore the use of these credits in your upcoming production’s plan!
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