What counts as qualified spend under the Texas film incentive program in 2026?

Short answer: Qualified spend under the Texas Moving Image Industry Incentive Program includes Texas-based payroll and production expenses that are directly tied to creating a film, TV show, commercial, or video game.

Why it matters: Misclassifying expenses can reduce or eliminate your rebate, which can mean leaving hundreds of thousands of dollars on the table.

Who this applies to: Producers, production accountants, studios, and game developers planning projects in Texas.

What is the Texas film incentive program?

The Texas Moving Image Industry Incentive Program is a state program that provides cash grants to qualifying productions based on their eligible in-state spending. It is not a transferable tax credit. Instead, productions receive a rebate after completing the project and submitting documentation. The program is designed to encourage job creation and production activity in Texas.

What counts as qualified spend in Texas?

Qualified spend generally includes costs that are paid to Texas residents or Texas-based businesses and are directly tied to producing the project.

Eligible categories typically include:

• Wages paid to Texas resident cast, crew, and production staff, up to the program’s individual wage cap
• Payments to Texas vendors for goods and services used in production
• Equipment rentals from Texas companies
• Studio, stage, and location fees paid in Texas
• Texas-based post-production services such as editing, sound design, and visual effects
• Production supplies and materials purchased in Texas
• Petty cash expenses that can be documented and tied to Texas production activity

For video game projects, eligible spend can include Texas-based development labor, art and animation services, audio production, and other interactive media creation costs.

The key principle is that the expense must be both Texas-based and directly related to the production of the moving image or game project.

What does not count as qualified spend?

Not all project costs are eligible, even if they are part of the overall budget.

Common non-qualified expenses include:

• Payments to non-Texas residents or out-of-state vendors
• Distribution, marketing, and advertising costs
• Travel outside Texas
• General overhead that cannot be tied specifically to the production
• Financing costs, legal fees unrelated to production, or completion bond fees
• Hardware purchases not directly tied to production use
• Operational business expenses that are not part of the actual production process

For game companies, venue operations, event hosting, or general business software are not considered production spend. Only the development of original interactive content and related production work typically qualifies.

Why productions often get this wrong

Qualified spend rules are often misunderstood because production budgets mix creative costs with business and distribution expenses.

Common mistakes include:

• Assuming all payroll qualifies, even for non-Texas residents
• Including marketing or festival costs in the rebate calculation
• Failing to document petty cash or vendor payments properly
• Treating general company overhead as a production expense
• Waiting until after wrap to organize receipts and vendor proof

By the time final documentation is prepared, it can be too late to fix missing or misclassified costs.

What’s current in 2026 and why timing matters

Updated as of January 2026

The Texas incentive remains a cash grant tied strictly to verified in-state spending. The state continues to focus on job creation and Texas residency, which makes payroll documentation especially important. Productions must apply before starting work and follow all reporting requirements during production. Late applications or missing documentation can result in reduced awards or disqualification.

Because funding is allocated in cycles, projects that plan early and structure their Texas spending carefully are in a stronger position to maximize the available rebate.

How to evaluate your project’s eligible spend

Determining what qualifies under the Texas incentive often comes down to documentation, residency verification, and how expenses are categorized. Productions that review their budget early and align accounting with incentive requirements tend to capture more of the available rebate. Those that wait until after wrap often discover gaps that cannot be corrected.

If you are unsure whether your project’s spending structure meets the program’s rules, it can help to review it with a team that works with production incentives regularly. TaxTaker works with film, television, and interactive media productions to assess eligibility, model potential rebate value, and guide documentation before submission.

If this applies to an upcoming or recently completed project, a short conversation with TaxTaker experts can help clarify next steps and identify whether meaningful savings are still on the table.

FAQ

Can above-the-line talent qualify as Texas spend?
Only if the individual is a Texas resident and the wages fall within program limits.

Do out-of-state vendors ever qualify?
No. Payments must be made to Texas-based businesses to count.

Does post-production in Texas qualify?
Yes. Editing, sound, and visual effects performed in Texas by Texas vendors are generally eligible.

Are marketing or distribution costs eligible?
No. The incentive applies to production, not promotion or release.