During the recently concluded 2021 legislative session, the Tennessee General Assembly enacted two state tax benefits for the creators of films, television episodes, and esports events (2021 Acts, Public Chapter 70), and one is a new sales tax exemption. The other is a credit that can be applied against a taxpayer’s combined excise (income) and franchise (net worth) tax liability, which are reported on a single tax return. Both the exemption and the credit hinge on the creation of a qualified production as determined by the Tennessee Film, Entertainment and Music Commission. Specifically, a “qualified production” means any of the following activities:
- (a) the production of a film, pilot episode, series, esports* event, or other episodic content in this state;
- (b) the creation of computer-generated imagery, video games, or interactive digital media in this state; or
- (c) stand-alone audio or visual post-production scoring and editing occurring in this state.
*The term “esports” means leagues, competitive circuits, tournaments, or similar competitions where individuals or teams play video games for spectators, either in-person or online, for the purpose of ranking, prizes, money or entertainment.
A summary of each benefit and the process for obtaining them are listed below.