Delaware is looking to attract more film, television and digital entertainment productions through a new state tax incentive. The initiative aims to encourage production investment, support local businesses and create more opportunities for Delaware's workforce.
With the introduction of the Delaware Entertainment Production Tax Credit, production companies now have another incentive to consider when evaluating where to develop and produce their next project.
What is Delaware's new entertainment production tax credit?
Established under House Bill 364, the Delaware Entertainment Production Tax Credit provides a credit equal to 30% of qualifying production expenses incurred in the state. The program has an annual allocation of $10 million and is available to production companies incorporated or registered to do business in Delaware. Eligible projects include feature films, television series, commercials, music videos, video games and esports productions.
Applications opened September 16, 2026, and certain qualifying production expenses dating back to July 1, 2026, may be eligible under the program. To qualify, businesses generally must spend more than $100,000 on eligible production activities in Delaware during a 12-month period. Applicants must also demonstrate that their production is at least 70% funded and meets the state's production timing requirements. The credit covers a range of production-related expenses, including certain payroll costs, equipment rentals, set construction, editing and other services directly associated with qualifying activities performed in Delaware.
How Delaware's transferable tax credit works
One of the key features of Delaware's new incentive is that qualifying production companies can transfer their tax credits to another eligible taxpayer. This means a company that cannot use the full credit against its own Delaware tax liability may be able to sell the unused portion to another business, subject to state approval.
Consider a production company planning a film project with $500,000 in qualifying Delaware expenses. If the project meets the program's requirements and receives approval, those expenses could generate a $150,000 state tax credit.
Now suppose the production company doesn't owe enough Delaware taxes to use that credit. Instead, it could sell the credit to another eligible business that does owe Delaware taxes. For example, the buyer might pay $135,000 for the $150,000 credit. The production company receives $135,000, while the buyer could potentially reduce its Delaware taxes by $150,000, saving $15,000 on the transaction. This example assumes the buyer has enough eligible Delaware tax liability to use the full credit. Actual savings may vary depending on the purchase price, transaction costs and applicable program requirements. Transfers also require state approval.
Common misconceptions about Delaware's entertainment production tax credit
"Only major film and television studios can qualify."
The program includes smaller and independent productions, provided they meet the eligibility requirements. Its scope also extends beyond traditional filmmaking to commercials, music videos, video games and esports.
Delaware has also reduced certain administrative requirements for qualifying small businesses with projects under $1.5 million, including an exemption from the standard third-party CPA certification requirement.
"A business must owe enough Delaware taxes to benefit from the credit."
Because the credit is transferable, eligible production companies may be able to sell or assign unused credits rather than relying entirely on their own Delaware tax liability. Transfers require advance approval from the Delaware Division of Small Business, and businesses should account for the terms and potential costs of any transaction.
"Any production spending in Delaware qualifies for the 30% credit."
Not every project or expense is eligible. Qualifying costs must be directly related to approved production activities in Delaware. Certain expenses, including marketing, story rights and services performed outside the state, are excluded. Businesses must also meet the program's application and approval requirements before receiving credits.
"Productions that started before applications opened are excluded."
Although applications opened in September 2026, the program took effect July 1, 2026. Productions with eligible Delaware expenses dating back to that date may still qualify, provided they satisfy the applicable requirements. Businesses should not assume that previously incurred expenses are automatically approved. The state reviews applications before determining eligibility.
What should businesses be reviewing?
Production companies considering Delaware should evaluate whether their planned activities and expenses meet the program's requirements before committing to a project. That includes reviewing eligible production costs, confirming business registration, preparing financing documentation and understanding the state's application process. Applicants must also submit a Delaware Impact Plan describing how the production will benefit the state and its residents. Businesses should pay particular attention to timing. Applications are accepted on a rolling basis until available funding is exhausted, and preliminary approval does not replace the final review required after production is completed. For companies considering selling unused credits, understanding the state's transfer approval requirements is another important part of planning.
Building on Delaware's production history
Delaware is no stranger to the entertainment industry. The 1989 film Dead Poets Society was filmed extensively throughout the state, with production reportedly generating approximately $8 million in local spending over 10 weeks and involving more than 1,000 Delaware residents. With beaches, historic towns, farmland and urban settings located within a relatively compact area, Delaware offers production companies a variety of filming locations. Its proximity to major East Coast cities adds another practical advantage. The new entertainment production tax credit builds on that history, with the goal of attracting more consistent production activity and creating opportunities for local businesses and workers. For companies evaluating locations for upcoming projects, Delaware now offers a financial incentive alongside its established production potential.
