The east side of the Delaware Legislative Hall (Delaware Capitol Building) in Dover, Kent County, Delaware by Famartin is licensed under Creative Commons Attribution-Share Alike 4.0 International license
LIGHTS! CAMERA! Poor tax policy? This is what Delaware is about to do with its latest plan to create a film production tax credit.
On July 1st, Governor Matt Meyer signed a 30% entertainment production tax credit into law. Even with the numerous tax hikes Delawareans are already experiencing, the state has managed to find a way to spend some of those new tax dollars on an incentive program that only a privileged few will be able to access. Rather than bringing businesses into the state by slashing personal and corporate income taxes – like virtually every top state for business is doing – Delaware is more interested in a lazy remake of tax policy that has already failed in other states for decades. The list is long, but here are some of the highlights.
New Jersey
In 2017, then-candidate for governor of New Jersey, Phil Murphy, claimed he wanted to make New Jersey the “California of the East” and used government policy to manufacture New Jersey’s own version of Hollywood. To get this off the ground, Governor Murphy signed legislation in 2021 to provide a 30% franchise and gross income tax credit for qualified film expenses.
The results have been far from perfect. From 2001 to 2023 (a time period pre- and post-implementation of the tax credit), employment in motion picture and video production in New Jersey remained stable, with only minor fluctuations mirroring national trends. Essentially, the program has not done much to improve employment in the film industry, even as the state spends millions of taxpayer dollars.
That should come as no surprise, as the economic case for film tax credits in general is weak. While large productions can generate temporary spending, they also impose real costs on local communities that are often ignored in economic impact estimates. Road closures, parking restrictions, and disruptions to commercial districts can reduce customer traffic for small businesses, offsetting much of the localized economic activity associated with filming, like hungry crews grabbing sandwiches for lunch. More importantly, every dollar spent subsidizing the film industry is a dollar unavailable for broad-based tax relief, infrastructure, or other public investments that would produce greater and more lasting economic benefits.
The results in New Jersey underscore the above concerns. Despite hundreds of millions of dollars in tax credits given to motion picture and video production companies, the industry still accounts for just 0.0375% of New Jersey’s total economic activity. For context, California’s film industry generates 1.4% of the state’s economic output. At the same time, the state has limited its ability to reclaim the tax credits if projects fail to generate the promised economic benefits, leaving taxpayers to bear nearly all of the financial risk while production companies reap the rewards.
Georgia
One of the most well-known states for film tax credits is Georgia. Back in 2005, then-Governor Sonny Perdue signed HB 539, an expansion of the state’s tax credit into law. While initially a 9% income tax credit, HB 1100 raised that number to 20%, making it one of the most generous in the United States.
What has Georgia gotten from this open-handed tax credit? Not much. According to the Georgia Department of Audits and Accounts, the state issued $667 million in tax credits in 2016, resulting in fewer than 10,000 jobs created. The State of Georgia effectively spent almost $74,000 per job. This number has only grown with the state issuing nearly $1.35 billion in tax credits in 2024. What is even worse is that 88% of these credits go to companies outside Georgia, providing targeted relief to a niche, out-of-state industry, rather than focusing on broad-based tax breaks for businesses and individuals, which would simplify the tax system and impose fewer distortions on Georgia’s economy. Additionally, 37% of the credits went to non-resident labor, meaning that Georgian taxpayers are financially supporting their own hard-earned dollars exiting the state. How does that make sense?
Even so, the money allocated for these tax credits rarely goes toward filmmaking. Only 3% of the film tax credits issued went into the actual process. This is because many of these companies do not generate enough Georgia liabilities to take advantage of the credit. Thus, these companies take advantage of the transfer rules to sell these credits on the open market, creating an environment where Georgian individuals and small businesses subsidize all kinds of profitable industries. To quantify this, Georgia’s film tax credit resulted in a 81% revenue loss from 2015 to 2022.
Even with the generous benefits Georgia was giving out, film companies still chose to leave the state. In 2025, Marvel Studios announced it was leaving Georgia and moving production to the United Kingdom. Furthermore, according to the Savannah Regional Film Commission, only 3 feature films were being shot in Georgia in 2025. Essentially, Georgian taxpayers footed the bill and rolled out the red carpet for the industry, only to be left in the dust.
Maryland
In 2001, then-Governor Martin O’Malley passed Maryland’s first film rebate program. By 2012, the program morphed into the current film production activity tax credit. This change allowed production companies to receive a 25% income tax credit, which increases to 30% for television projects and 28% for movies.
These tax credits have not led to long-term economic benefits for Maryland. According to the nonpartisan Maryland Department of Legislative Services, the state’s film industry employment has been falling since 2010 and wages have not kept up with other sectors.
Subsidizing movie and TV show projects does not put Maryland on a path to long-term economic growth. According to a 2015 report from the Department of Legislative Services, the over $60 million in tax credits granted by the state created short-term benefits in terms of economic activity and employment, which largely ended when these productions wrapped. This is because these productions are very mobile, meaning that the state cannot reap long-term economic or employment benefits from these generous film credits. This is one reason why the Maryland Department of Legislative Services has repeatedly called for their repeal.
Conclusion
With the unimpressive examples of New Jersey, Georgia, and Maryland in mind, Delaware is taking a big gamble by passing its own 30% film tax credit while raising taxes everywhere else. Per the bill’s fiscal note, taxpayers will pay $10 million in fiscal years 2028 and 2029 in hopes of securing business from the movie and TV industry. However, as repeated examples have shown, such incentives rarely yield the result that politicians and industry believe they will.
In effect, these programs represent a costly transfer of taxpayer dollars to a narrow industry with little evidence that it produces broad, sustained economic growth for the state. Given that Delaware lawmakers are pushing tax hikes, like a cigarette tax increase and new income tax brackets, remember that the tax relief they do pass is for targeted, economically inefficient tax credits that benefit very few ordinary families.
Instead of trying and failing to finally create the “Hollywood of the East,” Delaware could spend the 2027 session reducing personal income tax rates like ten states did this year, or reversing the damaging business fee increases enacted in HB 400 this year. Families and businesses, not just one limited category of mostly out-of-state corporations, deserve meaningful tax relief out of Dover at last.