Broadway Poised for Tax Benefit Boost in New York Budget Plan

As New York lawmakers continue to negotiate several policy issues in the overdue state budget plan, consensus is emerging around one area: providing more tax credits for Broadway and Off-Broadway productions.

New York Democrats are aligned on boosting the New York City Musical and Theatrical Production Tax Credit, though negotiations continue over whether to make changes in response to criticism over its use, said state Sen. James Skoufis (D). He and budget watchdogs have faulted the Covid-19 relief measure for subsidizing major hits like “The Lion King” that charge high ticket prices.

Gov. Kathy Hochul (D) included an extra $150 million for the credit in her Jan. 20 budget plan, bringing the total pot of money to $550 million. Both the state Senate and Assembly backed the measure in their March 10 budget resolutions.

“The top line is a done deal,” Skoufis said in an interview with Bloomberg Tax. “And that is despite my best efforts.”

The tax benefit was created in 2021 to help Broadway shows recover from the drop in ticket sales during the pandemic. Originally conceived as a $100 million, two-year relief measure, the incentive has since ballooned to four times that amount and is set to expire in 2028.

Productions in Manhattan theaters that contain at least 500 seats can apply for tax credits covering 25% of expenditures, up to $3 million per show. Shows that fill out at least 100 seats are eligible for up to $350,000. Other types of performing arts, like opera and ballet, don’t qualify for the incentive.

Hochul and state lawmakers continue to negotiate several aspects of the fiscal 2027 budget plan almost two weeks past the April 1 deadline. Sticking points include state climate policy deadlines, tax increases pushed by New York City Mayor Zohran Mamdani (D), and rising auto insurance rates. The legislature passed a budget stopgap measure Monday that will keep government operations funded through April 16 as discussions continue.

With the clock still running, Skoufis said he’s angling to make changes to how the musical and theatrical tax incentive is administered and which shows qualify. He declined to delve into specific requests.

“The topic has not closed down at the negotiating table,” he said.

The tax credit generates only 23 cents for every dollar invested by the state, according to a 2023 audit of state tax incentives by PFM Group Consulting. The report faulted the credit for not taking the financial needs of a production into account in deciding whether to award the tax credit.

Blake Washington, Hochul’s budget director, said the tax credit is necessary because Broadway continues to face economic challenges that threaten its survival.

“Something we pride ourselves on is to have that industry,” he said in an April media briefing, when questioned on the program. “And the governor, the things that make us New York are the things she wants to protect, and she’ll do so unapologetically.”