Over the last two years, the New York City Musical and Theatrical Tax Credit Program has been a leading force in helping the live theatrical industry recover from the devastating effects of COVID-19 and get back to where it was before the pandemic. The New York City Musical and Theatrical Tax Credit was implemented to provide economic incentive to those theatrical productions that perform in New York City. While this program has already benefitted numerous shows, it continues to evolve with new updates and amended program guidelines to ensure that the tax credit can be made available to as many musical and theatrical productions as possible.
Per the amended guidelines released on May 26, 2023, the tax credit will be made available for an additional two years, through September 30, 2025. This also extends the required date of the first paid public performance to be on or before June 30, 2025. An additional $100 million has been allocated to the program, reaching a total of $300 million to be provided to theatrical productions at qualified production facilities located in the Borough of Manhattan.
Broadway and Off-Broadway Productions
One of the biggest updates to come along with these amended program guidelines is the introduction of a tax credit for Off-Broadway shows. The New York City Musical and Theatrical Tax Credit will now be split into two different levels:
Level 1 applies to Broadway productions with a venue capacity of 500 seats or greater. Similar to the previous guidelines, the maximum credit remains 25% of qualified production expenditures up to a tax credit cap of $3 million. Per previous guidelines, there was potential for a reduction of the max credit to $1.5 million if the tourism industry in New York City was deemed to fully recover. This language has been removed from the new guidelines, and the cap will remain at $3 million.
Level 2 applies to Off-Broadway productions with a venue capacity containing at least one hundred seats. A level 2 venue must be in Manhattan and the theatre’s primary purpose must be to present theatrical productions. The maximum credit available for Level 2 productions is 25% of qualified production expenditures up to a tax credit cap of $350,000. To be eligible for Level 2, the production must have a production budget of at least $750,000 and incur at least $750,000 in qualified production expenses.
It is important to remember some of the general provisions of the program that remain in place upon the update:
- The credit period begins on the production start date, which is deemed to be up to twelve weeks prior to the first paid public performance.
- 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 can either be 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.
- The credit program requires a public access and availability plan outlining how the production will be made available and accessible to low-income New Yorkers at low or no-cost.
- The credit program requires a diversity and arts job requirement through a fellowship program that ensures participation of a fellow from a currently underrepresented community within the theatre industry.
- The applicant must provide an attestation that they intend to comply with the legal requirement to contribute to the New York State Council on the Arts Cultural Program Fund an amount up to fifty percent of the total credits received if the production earns ongoing revenue after the end of the credit period that is at least two hundred percent of its ongoing production costs.
Important Dates to Remember
Some key dates to remember:
- Initial applications must be submitted by an applicant prior to the first paid public performance and before June 30, 2025. Submission no later than ten days prior to such performance is highly encouraged.
- Final project summaries must be submitted no later than ninety days after the end of the credit period. The final project summary and all required final application materials must be submitted either directly to New York State or to a pre-qualified CPA firm for AUP preparation.
By extending the credit period, allocating additional funding, and creating incentives for Off-Broadway productions, the New York City Musical and Theatrical Tax Credit Program will continue to help lead the industry back into being a premier entertainment option in Manhattan, while committing itself to reaching low-income New Yorkers and expanding its diverse culture.