How tax breaks are additional incentives to bring ad film production to Illinois

Budgets aren’t getting bigger anytime soon, and staring down the idea of cutting creative or marketing funds is a showdown most would rather skip. But when tax incentives are in place, what agency wouldn’t welcome a guaranteed tax break on production?

The answer is not many, as more and more ad agencies are taking advantage of Illinois’ 30% tax credit on filming. Hollywood has taken advantage of the state’s tax incentives for years, and now the ad world is taking notice too.

According to Peter Hawley, director of the Illinois Film Office, of the nearly 500 production applications he greenlights each year, some 80% are for TV commercials.

The tax credit not only accounts for typical TV and movie filming, but also includes the advertising world, smaller indie projects and even student films. Because these smaller budgets were taken into consideration, the minimum spend to qualify for the tax credit is just $50,000 for under 30 minutes of content, with no cap on the program.

Production needs are set

“Historically, Illinois has been an optimal location for short-form production TV commercials,” Hawley said. “Chicago has Cinespace, the largest soundstage facility outside of Universal Studios, and Essanay Studios is the biggest TV commercial studio space in Chicago. Smash Virtual Studio is Chicago’s only dedicated virtual production studio, and with Resolution Digital Studios it allows producers to create any environment for any commercial production.”

The newly built Fields Studios is set to open in Q1 2024 with an additional nine soundstages to add to the already two million square feet of production space in the city. 

Chicago boasts a deep bench of production and post houses ranging from full-service houses like Optimus and Cutters Studios to smaller boutique houses so there are multiple options for every type of project.

In addition to having the physical space—and being home to dozens of leading ad agencies—Chicago supports a number of official organizations to help with the heavy lifting. The Illinois Film Office, Chicago Film Office, Illinois Production Alliance and World Business Chicago are partners in the effort to make the Prairie State the “Film Production State.” Not only do they help expedite permits and tax credits, but they also have deep lists of talent, crew and staffing.

Tax credits to include salaries

Illinois’ 30% filming tax credit has been in place since 2008, but once the state recognized the economic impact that film services had, the state legislature updated and expanded the program in 2022. Now, salaries up to $500,000 are eligible for the tax credit, including nine nonresident crew and out-of-state actors, depending on the project size, with an extra 15% incentive added when hiring crews from traditionally disinvested communities.

“This is really ideal for TV commercials,” Hawley said. “After we expanded the tax credit, the very first one I approved was for a TV commercial. It had an out-of-state director and talent, which now qualifies. It's open to writers, directors, actors and directors of photography.”

Brands such as McDonald’s, Anheuser Busch InBev and Walmart routinely film in Illinois because of this, as do many other CPG brands, farm equipment manufacturers and fashion labels.

“Chicago offers a best-in-class combination of production resources, facilities, vendors, talent, crew and locations,” said Jonah Zeiger, deputy commissioner for the Chicago Film Office (CFO) at the Chicago Department of Cultural Affairs and Special Events. “The CFO works seamlessly with the Illinois Film Office to ensure the transition from preproduction to production is as smooth as can be. We help ensure a streamlined permitting process including any requests for city services, and help with referrals to sister agencies such as the Park District or Chicago Transit Authority to make sure requests get to where they need to go.”

Even companies in the business of laughs are serious about Illinois film production. The online satirical magazine The Onion films a number of short-form videos for its site and corporate sponsors, and permanently moved its headquarters from Madison, Wisconsin, to Chicago because of the film production tax credit. The VR production firm Showrunner recently made the move from New York to Chicago too.

“The breadth and depth of who uses the tax credit have shown the diverse range of companies and talent that make Illinois, and especially Chicago, their home base,” said Michael Fassnacht, president and CEO of World Business Chicago. “As a brand or an agency, the financials of that are already motivating. When you add the locations, infrastructure and diverse workforce, it’s an easy decision to shoot your ad here.”