How the Texas film incentive works (2026)
Texas film incentive 2026: the 5% to 25% grant tiers, the 31% statutory cap, the 35% residency rule, the uplifts, and why non-resident wages earn nothing.
Texas rewrote its incentive in 2025 and rewrote the rules under it in 2026. Senate Bill 22 of the 89th Legislature took effect on 1 September 2025, and the Texas Film Commission's implementing rules (13 Texas Administrative Code chapter 121) were filed as adopted on 22 June 2026 and took effect on 12 July 2026. A lot of what is still circulating about Texas, including some material still posted by the state, describes the program as it stood before one or both of those dates.
For an independent producer the appeal is simple: this is a cash grant, not a transferable tax credit. There is no broker, no transfer discount, and no Texas tax liability to work around. The commission pays the applicant directly once the audit clears.
The rate, and what the rate is a percentage of
Three numbers get quoted about Texas. All three are routinely misread.
31% is a ceiling, not an offer. Government Code §485.025(i) says the total amount of all grants a project receives may not exceed 31% of total in-state spending. It is a statutory cap that sits on top of everything else. It is not the sum of a base rate plus uplifts, and no project is entitled to it. If you see "up to 31% in Texas," read the "up to" as load-bearing.
5% is the bottom tier, not a floor. The base grant is tiered by eligible Texas spend, under §485.024 and 13 TAC §121.6:
| Eligible Texas spend | Base grant |
|---|---|
| $250,000 to under $1 million | 5% |
| $1 million to under $1.5 million | 10% |
| $1.5 million and above | 25% |
A feature with real Texas spend is in the 25% tier. The 5% and 10% steps exist for small projects, and a project that lands just under a threshold gets the lower percentage on everything, not a blend. Digital interactive media projects use the same three rates from a $100,000 entry point. Commercials, educational and instructional videos, and reality television top out at 10% however much they spend.
The percentage applies to eligible Texas spend, not to your budget. Everything the program does not recognise, and there is a long list, comes out before the rate is applied.
What qualifies, and what earns nothing
Two buckets, under 13 TAC §121.5.
Wages
Only wages paid to Texas residents for work performed in Texas. Wages paid to non-residents are listed explicitly as ineligible, and so are their fringes: additional compensation, mileage and car allowances, housing allowances, box and kit rentals, and workers' compensation premiums for non-residents. There is no reduced rate for non-resident labour. It earns nothing, at any tier.
That is the single fact most likely to blow up a Texas budget built from a headline percentage. A production that flies in its department heads has stripped a large block of spend out of the calculation before the rate is applied.
One exception worth knowing, because it cuts the other way: the vendor spend around a non-resident can still qualify. A hotel room in Texas is a Texas vendor purchase, and airfare qualifies if it is on a Texas-based airline or air charter service with an itemised receipt. Their wages earn nothing; their hotel bill can.
Goods and services
Payments to Texas domiciled entities, sole proprietors and individuals for goods and services used in Texas that are directly attributable to physical production. The test is where the vendor is, not where the item ends up. Renting a package from an out-of-state house and trucking it in does not qualify; renting the same package from a Texas vendor does.
Some traps in the ineligible list that catch productions repeatedly:
- Payments to any entity without a physical Texas location, and "pass-through" agents or brokers that source out-of-state goods and labour into the program.
- Story, music and clearance rights, and licensing fees.
- Distribution, publicity, marketing and promotion, including promotional stills.
- Payroll company service fees, unless paid to a Texas-based payroll company that processes payroll in Texas. Workers' compensation service fees need a physical Texas business location.
- Shipping on anything originating outside Texas, and phone service whose service address is not in Texas.
- Capital items over $1,000 that survive the shoot, unless bought in Texas, sold at wrap, and evidenced, in which case only the difference between purchase and sale price counts.
The commission holds "sole and exclusive authority" to decide what is eligible. This is the biggest controllable lever on the final number, and it is decided in prep, one purchase order at a time.
The per-person cap
13 TAC §121.2, as adopted and effective 12 July 2026, reads: "Only the first $5,000,000 in aggregate wages and/or compensation per person shall constitute eligible Wage expenditures." That replaced $1,000,000.
The problem is that the commission's FY26 one-sheet ("First $1 million of each Texas Resident"), its program guidelines, and its public FAQ all still carry the old figure, because all three were published before the rule changed. The adopted rule is the law. The published summaries are not. If your number depends on claiming more than $1,000,000 against any one person, confirm it in writing with the incentives department before you lock the budget.
Above-the-line labour is eligible on the same terms as anything else, which is to say only for verified Texas residents.
The three gates
Miss any one of these and the grant is zero, not reduced.
- Minimum spend. $250,000 of eligible Texas spending for a film or television project, per season for an episodic series. $100,000 for commercials, educational videos, digital interactive media and their visual effects projects.
- 60% in Texas. At least 60% of the production must be completed in Texas, measured by filming days, or, at the commission's sole discretion, by man hours or by locating at least 60% of the actual paid locations in Texas, basecamps excluded.
- Residency. Under §485.023 as amended, the required percentage of production crew, actors and extras who are Texas residents is 35% for projects beginning principal photography on or after 1 September 2025 and before 1 September 2027. It rises to 40% for 2027 to 2029, 45% for 2029 to 2031, and 50% from 1 September 2031. For film and television the commission applies this as two separate tests: 35% of paid crew and 35% of paid cast including paid extras. Commercials, video games and reality television are measured on the combined total.
The residency percentage is a head count of everyone paid to work in Texas, which is why the commission wants crew and cast lists, call sheets and production reports. Only people with a valid residency declaration count in the numerator; everyone paid counts in the denominator. Track it weekly during the shoot. It is checked at submittal, when nothing can be changed.
How residency is actually documented
Every Texas resident crew or cast member completes a Declaration of Texas Residency (DTR) form. A Texas resident is defined as someone who has been a permanent Texas resident for at least 120 days before the project's principal start date and has completed that form.
The DTR is backed by one of three IDs, and all of them must have been valid 120 days before the first day of production: a valid Texas driver's licence or state ID card, a current Texas voter registration, or an ID card from a Texas college or university. Two fallbacks exist. Where someone holds one of those IDs but has not held it for the full 120 days, the rules allow residency to be established on a project of at least 30 filming days by supplying a HUD-1 settlement statement or a Texas property tax notice in their name, dated at least 120 days and no more than 13 months before the start date. The commission's FAQ describes the same property documents more broadly, as an option for someone who holds none of the three IDs but owns Texas property. Military personnel can submit a military ID plus orders showing a permanent change of station to a Texas posting, dated at least 120 days before the start date.
Build the onboarding paperwork around that list on day one. Collecting the wrong document is discovered at submittal, and by then the person is gone.
Uplifts: five that exist, two that do not yet
Government Code §485.025 creates seven additional grants. Each is written as a percentage of total in-state spending, so an uplift adds points to the whole spend base rather than a percentage of your grant. Six are worth 2.5% and postproduction is worth 1%.
13 TAC §121.7, as adopted, implements five of them:
| Uplift | Value | Test |
|---|---|---|
| Rural filming | 2.5% | At least 35% of filming days or man hours in a Texas county of 300,000 people or fewer |
| Texas veterans | 2.5% | Texas resident veterans are 5% of combined paid crew and paid cast including extras |
| Texas historic site | 2.5% | Filming (not basecamp) at qualifying historic sites on 5% or more of total production days |
| Workforce development | 2.5% | Partnering with a Texas institution of higher education on workforce development during production |
| Postproduction | 1% | 25% of total eligible in-state spending falls in postproduction: labour, vendors, music |
The Texas heritage and faith-based grants exist in statute but have no implementing rule. In adopting the July 2026 amendments the Governor's Office stated plainly that those two "will be addressed in a future rulemaking," and it repealed the old §121.13 Texas Heritage Project rule at the same time. The commission's website still lists both as selectable. Until a rule is adopted defining how a project is designated, neither is bankable. Do not budget them.
Now the arithmetic that the 31% cap forces. From the 25% tier, the five available uplifts total 11 points, which would reach 36%. The cap stops it at 31%, so only six points of uplift can ever land on a top-tier project. Below the top tier the cap does not bite: a project at 10% earning all five uplifts reaches 21%.
The practical consequence is that a 25% project should chase the two or three easiest uplifts and stop. Rural filming and workforce development are usually the cheapest points on the board, because both are scheduling and partnership decisions made months before anyone is thinking about submittal. Uplifts must be selected on the application and are not granted retroactively.
Content review is real, and it is not appealable
13 TAC §121.4(b) states that the commission is not required to act on any application and may deny an application or the eventual grant payment "because of inappropriate content or content that portrays Texas or Texans in a negative fashion," considering "general standards of decency and respect for the diverse beliefs and values of the citizens of Texas." SB 22 wrote the same standard into the legislature's stated intent.
There are two content checkpoints, not one. The commission reviews your content document as part of the preliminary application process, and §485.022(h) requires it to tell you whether the content will preclude a grant. Under §121.4(c) it reviews the final content again before issuing payment, to see whether the project changed. It may rescind preliminary approval at any point in the process. Funding decisions are final and not subject to appeal.
You submit a full script for a feature or a television program, the first Texas episode's script for a series (and further episodes if requested), a script, storyboard or detailed outline for commercials and educational videos, a content summary for games and XR, and a treatment or outline for reality television. If there is any question about how your material reads, resolve it at application, not at submittal.
Approval also is not purely mechanical. Beyond the minimums, the commission weighs the applicant's financial viability, spend on existing Texas infrastructure such as soundstages and vendors, jobs created, tourism value, the size of the Texas spend, and whether a Texas resident directs or produces the project.
The money, and the queue
SB 22 created the Texas Moving Image Industry Incentive Fund. It sits outside the state treasury, is held by the Texas Treasury Safekeeping Trust Company, and can be spent without legislative appropriation. Within the first 30 days of each state fiscal biennium the comptroller deposits $300 million into it. The fund and the enhanced program structure expire on 31 August 2035, after which the program reverts to its pre-2025 form. Grants awarded before then stay governed by the current law.
There is no per-project cap. There is a queue. Applications are reviewed in the order received, approval is conditional on funds being available at the time of determination, and the commission's own guidance is that fund availability may change daily and that you should call early in your window to ask where the pool stands. Apply early is not a platitude here; it is the mechanism.
Dates you have to hit
- Inquiry, then application. Applications are accepted no earlier than 180 days before the principal start date and must be received by 5:00 pm Central on the fifth business day before it. You start with an incentive inquiry form and the commission sends the application link, so leave time for that step.
- Confirm the start. Within five business days of your stated principal start date, confirm in writing that production began on time. A delay of more than 30 days can disqualify the application; a push of more than 60 days means withdrawing and reapplying.
- Report during production. Once the grant agreement is executed, quarterly grant status reports are due at the end of November, February, May and August. The commission may request documented quarterly detail on spend, locations and Texas hires at any time.
- Submit within 60 days. Final documentation is due within 60 days of the final Texas expenditure. If you finish post in Texas, the clock runs from the last post expenditure. No independent CPA audit opinion is required for projects applying after 27 March 2017; you submit the commission's verification worksheet, its Excel expenditure worksheets, and the documentation of spend behind every claimed dollar.
- Audit, compliance, payment. The commission audits the submission, then the Governor's Office Division of Compliance and Monitoring runs a separate compliance review. Funds are not disbursed until that review is approved and the applicant has settled any financial obligation to the State of Texas.
The commission publishes no turnaround figure for the audit, and says so directly: the time depends on the size of the queue, the size of the project, and how well the documentation is organised. Treat the interval as unknown and financeable rather than as a number you can assume. Ask the incentives department what submittal-to-payment is currently running before you build a cash-flow plan on it.
The other Texas money
The grant is not the whole picture. Texas also offers an up-front sales and use tax exemption at 6.25% to 8.25% on most items rented, leased or purchased for direct use in production, a refund of the 6% state occupancy tax on hotel rooms held more than 30 consecutive days, and refunds of fuel tax on fuel used off-road. These are administered by the comptroller, not the film commission, and they are savings you take during production rather than a grant you wait for.
Where productions actually lose money
Not in the application. In the middle.
The recurring failures are documentation failures: DTR forms collected late or backed by the wrong ID, vendor invoices that do not establish a physical Texas location, proof of payment that cannot be reconciled to the invoice it belongs to, and spend categorised in a way the auditor will not accept. Improperly formatted worksheets get returned and go back into the queue. Each of these is trivially fixable during production and impossible to fix afterward.
The productions that collect the full number are not the ones with better applications. They are the ones that treated compliance as a production department from day one.
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Sources
- Texas Government Code chapter 485, as amended by Senate Bill 22, 89th Legislature, Regular Session (enrolled text), effective 1 September 2025
- 13 Texas Administrative Code chapter 121, amendments to §§121.1 to 121.10 and 121.14 and repeal of §121.13, filed for adoption 22 June 2026, published in the Texas Register 3 July 2026, effective 12 July 2026; proposed text published 13 February 2026 (51 TexReg 793)
- Texas Film Commission, TMIIIP program pages: Production Incentives Overview, Film & Television Projects, Additional Grant Awards, TMIIIP FAQ
- Texas Film Commission, Program Guidelines and Texas' Production Incentives at a Glance, 1 September 2025 to 31 August 2027
Shooting in Texas? We can tell you what your realistic net number looks like, which uplifts you can actually earn under the current rules, and what your documentation load will be. Talk to the team →