
Brian D. Spector
Partner
201-896-7206 bspector@sh-law.comFirm Insights
Author: Brian D. Spector
Date: December 1, 2023
Partner
201-896-7206 bspector@sh-law.comThe New York City Musical and Theatrical Tax Credit Program was established to help the theater industry recover from the COVID-19 pandemic. It has grown to become a key funding resource for both Broadway and Off-Broadway productions.
In May 2023, the tax credit was extended for an additional two years, through September 30, 2025. Additionally, another $100 million was allocated to the program, for a total of $300 million. Under the amended guidelines, the date of the first paid public performance must now be on or before June 30, 2025.
First launched in 2021, the New York City Musical and Theatrical Tax Credit Program is designed to incentivize theatrical productions in NYC and boost tourism in the wake of the COVID-19 pandemic by offsetting certain costs associated with producing a show in New York City. Eligible expenditures for eligible productions include:
Companies applying for the NYC Musical and Theatrical Tax Credit must implement a New York State-approved diversity and arts jobs training plan and take actions to increase access to productions for low-income residents. Highly successful productions, which are defined as those generating ongoing revenues more than 200% of their ongoing production costs after reaching the end of their credit period, must contribute up to 50% of the tax credit to the New York Stater Council for The Arts Cultural Program Fund.
To be eligible for a tax credit, a musical and theatrical production generally must be a live, scripted performance with one or multiple performers that, in its original or adaptive version, is performed in either a Level 1 Qualified New York city production facility or a Level 2 qualified production facility in New York City.
Under the New York City Musical and Theatrical Tax Credit Program, the following productions are ineligible for tax credits: ballet, opera, musical solo, group, band or orchestra performance, or solo, duo, or several performers’ stand-up comedy performances.
Initial tax credit applications must be submitted prior to a production’s first public performance. The initial application consists of the following:
Applicants must also agree to contribute to the New York State Council on the Arts Cultural Program Fund if ongoing revenues are more than two times ongoing production costs after receiving a tax credit.
The New York City Musical and Theatrical Tax Credit Program is currently funded until 2026.Pursuant to the most recent program guidelines, initial applications must be submitted prior to the first public performance and before June 30, 2025. Final project summaries are due no later than 90 days after the credit period end date.
The credit period begins on the production start date, which is deemed to be up to 12 weeks prior to the first paid public performance. Meanwhile, the credit period ends on the earliest of the following: the date the production has expended sufficient qualified production expenditures to reach its credit cap; the date the qualified production closes or September 30, 2025. The date the production closes is defined as either the date of the last paid performance or the date after the production’s final paid performance on which the move of all physical production assets from the theatre is complete and all qualified costs are paid.
To reap the full benefits of the NYC Musical and Theatrical Tax Credit, it is essential to understand the eligibility requirements, qualified costs, application process, and regulations that govern the tax credit program. Scarinci Hollenbeck’s Entertainment & Media Law Group is staffed with industry insiders who can help productions successfully navigate the process.
If you have any questions or if you would like to discuss the matter further, please contact me, Brian Spector, at 201-896-4100.
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