Essential film funding guidance on tax deductions, NY/NJ credits, and sustainability
by Carole Dean
Based on guidance and insights from Fred Siegel, CPA in his 2026 New Year’s newsletter addressing current film tax issues and the NY & NJ film tax credit programs.
Each year, experienced professionals quietly signal changes that can either protect a filmmaker—or expose them to unnecessary risk.
As we begin 2026, those signals are coming clearly from Fred Siegel, CPA, a leading authority on film taxation and state film tax credit programs in New York and New Jersey.
For indie filmmakers, these updates are not administrative details.
They directly affect how films are financed, how investor conversations are framed, and how sustainable a creative career can be over time. Film funding guidance grounded in current tax law is essential for anyone serious about long-term progress.
Why These Changes Matter Right Now
Tax deductions and state film tax credits are often built into film budgets, investor pitches, and deal structures. When the rules change, outdated assumptions can quietly undermine a project.
Independent filmmakers build credibility through accuracy. Clear, current information strengthens investor trust and protects both filmmakers and supporters from costly consequences. Smart film funding begins with knowing which incentives are active, which have expired, and how timing affects eligibility.
The Expiration of Section 181
IRC Section 181 previously allowed certain film production costs to be deducted in the year they were incurred. As of now, that provision has expired for films that did not commence principal photography by December 31, 2025.
A common misconception is that filming a single day automatically qualifies as principal photography. That assumption is risky. Principal photography must be genuine, substantive, and defensible. Improperly claiming this deduction can expose both producers and investors to significant IRS consequences.
While proposed legislation may extend Section 181 in the future, filmmakers must operate under current law until changes are formally enacted.
Section 168: A Permanent Path Forward
IRC Section 168 allows for accelerated deductions of film costs once a film is commercially released, provided specific conditions are met. Unlike Section 181, Section 168 is now permanently effective for 2026 and beyond.
In 2025, only a partial deduction was available. In 2026, filmmakers gain predictability and a 100% deduction for federal income tax purposes. This permanence allows for more intentional planning around release timing, budgeting, and long-term financial strategy. When tax treatment is stable, creative decisions become easier to support.
New York Film Tax Credits: Meaningful Shifts for Indie Filmmakers
New York enacted substantial updates in 2025 to its film tax credit program that directly affect independent productions.
Certain above-the-line costs now qualify for the New York State film production credit without prior dollar limitations. This expansion can materially increase the total credit available to qualifying films.
Additionally, rules that previously required film tax credits to be paid out over multiple years have been removed. Faster access to credit proceeds improves cash flow and strengthens a film’s financial position during and after production.
A New Production Credit Program for Indies
New York has introduced a separate production credit program designed specifically for independent filmmakers. While it offers quicker access to funds, it also imposes tighter rules and funding caps.
Most importantly, applications must be submitted during limited annual windows. For 2026, the January window runs January 12 through January 15, with a second window scheduled for July. Outside these periods, applications currently will not be accepted.
In contrast to the traditional film tax credit program, which is still in effect, timing in the new Indies program is not flexible. Missing an application window can delay or eliminate access to this new credit program entirely.
The “Production Plus” Opportunity
A new “Production Plus” program allows filmmakers with multiple qualifying projects to receive an additional 5% or 10% on standard New York film tax credit rates. In some upstate locations, total credits may reach as high as 45% or even 50% of qualified costs.
This change rewards long-term planning. Filmmakers who think beyond a single project can leverage continuity to strengthen their funding structures.
New Jersey Film Tax Credits: Increased Flexibility and Speed
New Jersey has made filmmaker-friendly changes that affect when and how film tax credits can be claimed. For new projects after July 2025, filmmakers now have greater flexibility in choosing the year in which the credit is applied.
This flexibility can make credits easier to sell, faster to monetize, and more attractive to investors. New Jersey, like New York, also offers a post-production-only tax credit program. This allows films shot elsewhere to qualify based solely on post-production spending within the state.
Strategic post-production decisions can now unlock funding that was previously unavailable.
Practical Guidance for Indie Filmmakers Moving Into 2026
Independent filmmakers can take several grounded steps right now:
Verify that all tax deductions and credit assumptions included in budgets or pitches reflect current law.
Plan production schedules, release timing, and application deadlines with precision.
Work with qualified professionals who understand film-specific tax and credit structures.
Think in terms of sustainability, not just survival. Long-term alignment builds leverage.
When financial structure supports creative vision, momentum becomes easier to maintain.
Sustainable Creativity Requires Alignment and Clarity
Independent filmmaking is a long game. It requires patience, consistency, and a willingness to understand the business realities that support creative freedom.
When filmmakers trust accurate guidance, respect timing, and align financial strategy with artistic intent, fear diminishes and confidence grows. Sustainable creativity is built through informed choices and steady forward movement.
The more grounded your understanding, the stronger your leadership—and the more resilient your filmmaking journey becomes.
About Fred Siegel, CPA
Fred Siegel, CPA, is a leading expert in film taxation, film tax credits, and film business and accounting matters. He advises independent filmmakers and their production and development companies on federal and state tax issues, deal structures, and state film tax credits, among other film business-related areas.
He is particularly active in the film tax credit space in New Jersey and New York and is one of nine CPA firms pre-qualified by New York State to “audit” final applications for NYS film tax credits. Fred is known for providing practical, real-world guidance that helps filmmakers protect their projects and investors.
You can contact Fred at:
Fred Siegel, CPA
382 Central Park West 20G
New York, NY 10025
fred@fredsiegelcpa.com 212 865-3048
www.fredsiegelcpa.com
We Care, We Know, We Do. It’s that Simple.
Carole Dean is president and founder of From the Heart Productions; a 501(c)3 non-profit that offers the Roy W. Dean Film Grants and fiscal sponsorship for independent filmmakers.
She is creator and instructor of Learn Producing: The Ultimate Course for Indie Film Production. Essential classes for indie filmmakers on how to produce their films.
She hosts the weekly podcast, The Art of Film Funding, interviewing those involved in all aspects of indie film production. She is also the author of The Art of Film Funding, 2nd Edition: Alternative Financing Concepts. See IMDB for producing credits
