Legislative Analysis
Phone: (517) 373-8080
FILM AND DIGITAL MEDIA INCOME TAX
http://www.house.mi.gov/hfa
CREDIT PROGRAM
Analysis available at
House Bill 4907 as reported from committee http://www.legislature.mi.gov
Sponsor: Rep. Jason Hoskins
House Bill 4908 as reported from committee
Sponsor: Rep. John R. Roth
Committee: Economic Development and Small Business
Revised 9-4-24
SUMMARY:
House Bills 4907 and 4908 would amend the Michigan Strategic Fund Act and the Income Tax
Act, respectively, to create a transferrable income tax credit administered by the Michigan Film
and Digital Media Office that would be available to companies that produce qualified
productions in Michigan. The new program would repeal and replace the former Film and
Digital Media Production Incentive, which was eliminated in 2015 (see Background, below).
The bills are tie-barred together, meaning that neither can take effect unless both are enacted.
Qualified production would mean single media or multimedia content created wholly
or partially in Michigan for distribution or exhibition by any means and media in any
digital format, film, or videotape. 1 It would not include any of the following:
• A production containing sexually explicit conduct for which age-verification
records are required by federal law.
• A production that includes obscene matter or an obscene performance.
• A production that primarily consists of televised news, current events, a live
sporting event, or political advertising.
• A weather show or financial market report.
• A radio program or talk show.
• A game show or an unscripted reality production that is not a commercial.
• An awards show or other gala event production.
• A production with the primary purpose of fundraising.
House Bill 4907 would amend the Michigan Strategic Fund Act to authorize the Michigan
Film and Digital Media Office to exercise its duties and responsibilities under sections 285 and
677 of the Income Tax Act, the sections that would be added by HB 4908 to create the film
and digital media tax credit program.
The Michigan Film and Digital Media Office (MFDMO) is led by a governor-appointed
Michigan Film Commissioner and is authorized by the Michigan Strategic Fund Act to provide
1
A qualified production would include, but not be limited to, a motion picture, documentary, television production,
music video, advertisement, commercial photography production, web-based content, and animation.
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 several services pertaining to film, digital media, and television. 2 Under the bill, the office
would instead provide services specifically related to films, television, commercials, corporate
videos, commercial photography, and digital media, and the Michigan Strategic Fund would
be responsible for appointing the Michigan Film Commissioner.
The Michigan Film Commissioner could promulgate rules as necessary to administer the
program, and the MFDMO would be able to do all of the following:
• Prescribe forms for applications, notifications, contracts, and other agreements.
• Accept applications, determine eligibility, and issue qualified production certificates
for tax credits for ten years after the program goes into effect.
• Work with applicants, qualified Michigan vendors, and other vendors to ensure that
all qualified personal expenditures and qualified production expenditures eligible for
the proposed tax credit are paid.
• Assist applicants to promote, foster, and support qualified productions and related job
creation or retention in Michigan.
• Subject to appropriation, employ sufficient personnel for the administration, operation,
and support of the tax credit program and to discharge its duties and responsibilities
under the Michigan Strategic Fund Act and the Income Tax Act.
• Require an applicant to keep proper books of record and accounts.
• Require books, records, and other documents related to a qualified production that are
in the custody or control of an applicant to be open to reasonable inspection by the
MFDMO for at least one year after the completion of a certified public accountant’s
determination of and attestation to the production’s qualified expenditures.
• Take any necessary or appropriate actions to protect the interest of the state in the event
of bankruptcy, default, foreclosure, or noncompliance with the terms and conditions of
the tax credit program or any agreement or contract under the program.
Applicant would mean a taxpayer that is engaged in the business of producing qualified
productions and that owns the copyright to a production during the production period,
or that is authorized by or has a contract with another entity or copyright holder
engaged in the business of producing qualified productions. It would not include an
entity that is more than 30% owned, affiliated, or controlled by an entity or individual
that is in default on a loan made or guaranteed by Michigan or any other state.
Production period would mean the period between the greenlighting of a qualified
production and its completion, including preproduction, production, and
postproduction. It would not, however, include the time to develop or acquire rights to
produce the project or the time to market, promote, or distribute the production.
Qualified Michigan vendor would mean a business that meets all of the following
requirements:
• It has commercial domicile or is incorporated or registered to do business in
Michigan prior to commencing work on the qualified production.
• The vendor has at least one physical location in Michigan.
2
Currently, the list of services the MFDMO is authorized to provide includes scouting potential filming locations and
escorting producers on location scouting trips. House Bill 4907 would remove these provisions.
House Fiscal Agency HBs 4907 and 4908 as reported Page 2 of 12
 • The vendor has been doing business for at least six months before the date of
the accredited production certificate (as provided for by House Bill 4908) and
is subject to taxation under the Income Tax Act, the General Property Tax Act,
and the General Sales Tax Act.
• If the vendor sells or rents equipment, it maintains inventory in Michigan on a
continuous basis and has at least one full-time employee in the state.
In connection with the tax credit program, the MFDMO also could gather information and
conduct inquiries as it considers appropriate, including information for the purpose of making
designations or certifications, information to assist with any recommendations or guidance in
furtherance of the purposes of the tax credit program, and financial reports or other records
relating to the applicant or qualified production. Upon written request, the MFDMO could
require applicants to issue any necessary authorization to the appropriate federal, state, or local
authority for the release of the information.
Finally, the bill would repeal the previous Film and Digital Media Production Assistance
Program.
MCL 125.2029 et seq.
House Bill 4908 would amend the Income Tax Act to provide an income tax credit for certain
expenditures incurred in Michigan for qualified productions. The bill would add two sections
to the act—one to Part 1, which deals with the individual income tax, and one to Part 2, which
addresses the corporate income tax. The credits would be available for ten years, beginning
when the bill takes effect, and would be claimed after all other tax credits under Part 1 or Part
2, as applicable.
The bill would allow the Michigan Film and Digital Media Office to approve a credit against
the individual or corporate income tax for a state-certified qualified production for the
following amounts:
• 30% of the qualified production expenditures if the proposed production includes
approved logos 3 or an approved alternative marketing mechanism.
• 25% of the qualified production expenditures if the proposed production does not
include approved logos or an approved alternative marketing mechanism.
• 30% of the qualified personnel expenditures attributable to employees who are
Michigan residents at the time the applicant begins work on the production.
• 20% of the qualified personnel expenditures attributable to employees who are not
Michigan residents.
• 10% of the qualified probationary Michigan vendor expenditures that would have
been qualified production expenditures if the vendor was a qualified Michigan vendor.
State-certified qualified production would mean a qualified production that has been
issued a tax credit certificate by the MFDMO.
3
These logos would be the MFDMO-approved “Filmed in Michigan,” “Pure Michigan,” “Michigan Film Industry
Association,” and “Michigan Film & Digital Media Office” logos.
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 Qualified production expenditure would mean an expenditure made in Michigan
during the production period to a qualified Michigan vendor that is directly attributable
to a qualified production and is subject to taxation in Michigan, including any of the
following:
• Rental or use of facilities or equipment, location fees, and any related services
and materials to the extent that the tangible assets are used in Michigan for the
qualified production.
• Use of vehicles and fuel costs for transportation in Michigan, including
chartered aircraft based in Michigan, that are directly attributable to the
production of a qualified production. The chartering of aircraft for
transportation outside of Michigan would not qualify, and the costs attributable
to in-state chartered aircraft would be limited to two round-trip fares per
individual for each production.
• Commercial airfare for domestic travel to, from, or within Michigan that is
directly attributable to the production or distribution of a qualified production.
Commercial airfare expenditures would be limited to two round-trip fares per
individual for each production.
• Insurance coverage or bonding if purchased from a Michigan-based insurance
agent.
• Postproduction costs directly related to the qualified production during the
production period, including animation, dailies, editing, sound recording or
editing, special or visual effects, scoring, beginning and end credits, and
dubbing and subtitling.
• Stock footage or stock music.
• Expenditures made to purchase, lease, or use tangible personal property during
the production period or to acquire services performed in Michigan that are
directly attributable to the production.
A qualified production expenditure would not include any pass-through transactions or
purchases made from a qualified Michigan vendor for any goods or services that are
not within the vendor’s ordinary course of business. It also would not include an
expenditure related to the acquisition or licensing of content used in the production or
the purchase of tangible assets if the assets retain residual value or are not fully
consumed by the qualified production during the production period.
Qualified probationary Michigan vendor would mean a Michigan vendor that would
be a qualified Michigan vendor except that the vendor has been doing business in
Michigan for less than six months before the date of the accredited production
certificate and, if that vendor is engaged in the business of selling or renting equipment,
it does not have at least one full-time employee in Michigan.
Qualified personnel expenditures would mean payments and compensation of up to
$500,000 for each employee per qualified production project who performs services in
Michigan that are directly attributable to the qualified production, including payment
of wages subject to the Income Tax Act’s withholding requirements and payments to
a loan out company if it has complied with those withholding requirements for each
employee who performs services in Michigan directly attributable to the production.
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 Loan out company would mean a personal service corporation 4 or another entity
contracted with by the applicant to provide specified individual personnel (such as
artists, crew, directors, or producers) for services that are directly in a qualified
production. (It would not include an entity contracted with to provide goods or ancillary
services for a production, such as catering, construction, trailers, equipment, or
transportation.)
The MFDMO could approve an additional 5% for each of the amounts listed above if the
applicant has qualified production expenditures or qualified probationary Michigan vendor
expenditures that are attributable to a qualified Michigan vendor that is a certified minority- or
woman-owned business, a certified business owned by persons with disabilities, or a veteran-
owned business. 5 The office could also approve an additional 5% credit if an applicant has
qualified personnel expenditures attributable to employees who are members of a minority,
disabled, or veterans.
For commercial photography productions or productions that are under 20 minutes in duration,
the total amount of credits awarded by the MFDMO could not exceed $25.0 million for each
of the first three years, $50.0 million for each of the next three years, and $75.0 million for
each of the final four years. For qualified productions that are at least 20 minutes in duration,
the annual cap would be $100.0 million for the first three years, $150.0 million for the next
three years, and $200.0 million for the final four years.
A single applicant could not receive a credit worth more than 20% of the annual cap unless the
MFDMO decides that a greater amount would be in the best economic interest of the state.
Applications
Applicants would be required to submit an application to the MFDMO that includes a detailed
description of the proposed production and an estimate of the production’s qualified production
expenditures, qualified probationary Michigan vendor expenditures, and qualified personnel
expenditures, in addition to any additional requested records or information.
Applicants would also have to pay a nonrefundable application fee to the MFDMO, which
would be $1,000 for a production under 20 minutes in duration and $2,000 for a production 20
minutes or longer. The fees would be deposited in the Michigan Film Promotion Fund.
If the MFDMO receives an incomplete application, it would have to notify the applicant within
two days to describe the deficiency and request that additional information be submitted within
30 days. The office could not process or approve an application until it is complete.
Completed applications would have to be considered in the order received. The MFDMO
would have seven days to approve or deny a completed application for a proposed qualified
production that is at least 20 minutes in duration and two days to approve or deny a completed
4
Personal service corporation would mean that term as defined under section 269A of the Internal Revenue Code:
https://www.govinfo.gov/content/pkg/USCODE-1998-title26/pdf/USCODE-1998-title26-chap1-subchapB-partIX-
sec269A.pdf. It would also include any other entity, such as a sole proprietorship or independent contractor, that meets
the principal activity and ownership requirements.
5
Veteran owned business would mean a business enterprise where veterans own, control, and operate more than 50%
of the voting shares and where more than 50% of the business’s net profit or loss accrues to shareholders who are
veterans.
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 applica