Update on the Broadway Tax Credit - Deadline Shifts and How Non-Profits are Qualifying

There has been a lot of press about the NYC Musical and Theatrical Production Tax Credit, but so much remains unclear. I continue to get regular questions about it, months after any major news hit. I can report now that Empire State Development (ESD), which administers the credit, is taking applications from shows with a first paid performance on or prior to December 1, well over a month after the previously reported deadline. This article will also cover a frequently asked question regarding nonprofit eligibility for the tax credit.

First things first—the extension. I know readers will wonder why the deadline keeps shifting. When news broke that the spigot had run dry, ESD stated that only shows that began performances before September 15 could apply. A few days before that deadline, the marker was moved to October 20. This is another move. That’s because the idea was always to pause accepting and then reassess. ESD was sitting with a stack of applications and revisions on applications and they had to assess how much money of the $400 million was actually left. Some of the estimates in my prior story did not represent what would be the full allotment because shows were extended and, therefore, racked up increased eligible expenses. In some cases, the estimates were for too much, because the show closed earlier than expected. In at least one case, an application was withdrawn entirely. This all means there was movement in the numbers, allowing for this extra bit of time. As per ESD: “While this new date aims to take into account current projections, partial credits may be issued if funding is exhausted prior to the new deadline.”

Moving on to nonprofits. I previously wrote about being caught off guard when I noticed shows that were ostensibly produced by nonprofits were receiving the tax credit. This even though the statutory and regulatory provisions related to this credit stated that qualified productions are “for-profit live, dramatic stage presentation[s].” Many readers asked me how this was happening. Was it because of enhancement money? Were commercial producers that had enhanced productions getting the money? Did we all just misunderstand the meaning of “for-profit”? Was it something else?

Well, it turns out, nonprofits are indeed ineligible. However, there is a workaround: use a related for-profit corporation. The entities receiving the credits are in fact for-profit corporations associated with the nonprofit. Roundabout Theatre Company Productions, Inc. was formed July 2024. 2ST Productions, Inc. was formed March 2024. STC Productions, Inc., which is the Signature Theatre Company entity, was formed April 2025. These entities were formed to receive the tax credit, whether anyone will officially confirm that or not. That doesn’t mean they can’t do other things now that they exist—commercial entities have long been used by nonprofits around the country as a way to have a larger role in commercial transfers or album profits—but in these cases the timing isn’t coincidental. (I’m referring to these commercial entities as “associated with the nonprofits,” but they have their own paperwork, are supposed to have their own leadership, etc.)

Manhattan Theatre Club is the only nonprofit using a pre-existing commercial entity to collect its subsidy. MTC Productions, Inc., which is collecting the credit from Old Friends, was formed all the way back in 1991. According to the state website, Michael Coles is its CEO. In1991, he was Chairman of the Board of the non-profit MTC. Sadly, he passed away earlier this year. He had stopped upkeep of MTC Productions long before that—it hasn’t filed a biennial registration statement with the state since 2019. So, while this isn’t a newly formed entity, I suspect it hadn’t been used for a bit. A MTC press agent could not provide information on it.

I’ve been told that the state subsidy that has been going into the for-profit companies is not going to commercial producers that may have enhanced a production, but rather into the nonprofits for operational costs. I’ve also heard tale that might not tell the full picture in the future (if the credit is extended as-is), as commercial producers try to configure enhancement deals differently.

Now, there is a question about whether this should be allowed. In these times, our nonprofits need all the help they can get, so in that sense I’m all for them getting the credit. And while we often talk about the credit as a means to spur investment in Broadway—which is less applicable to nonprofits—the program was technically about “offsetting some of the additional costs associated with producing a show as New York’s economy recovers[.]” Nonprofits have costs. All good there.

But, there is an ickiness to it. The statute and regulations clearly reference “for-profit” and, during an attempt earlier this year to expand the applicable geographic region of Level One eligible venues to encompass Lincoln Center, State Senator Brad Hoylman-Sigal said the purpose was to “allow[] commercial producers using their venues to benefit from the tax credit.” Seems pretty clear.

You could argue that is not because of any legislative intent—it is simply because nonprofits don’t pay taxes in most situations and this is a tax credit, so of course it went to commercial productions only. You could also argue that all you need to be a commercial producer is a commercial entity and these nonprofits have that.

However, the companies are paying Actors’ Equity members on special contracts that only apply to nonprofit producing entities at their own houses. This means, on Broadway at least, the minimum nonprofits are obligated to pay is less than it is in the commercial production contract. (Nonprofits also benefit from other advantages.) In other words, these shows represent to unions they are not-for-profit but then represent to the state they are for-profit.

Perhaps if the tax credit is renewed with additional funds—and I truly hope it is and believe it should be—there should be revisions to account for this. Lincoln Center could be added. It could also be made clear that entities presenting theater, whether they have the mission of a nonprofit or not, are entitled to state subsidies because they are also facing increased costs and decreased attendance.

I personally think there should be a lot of revisions—I believe in a 100% payback under very clear terms (i.e. recoupment). If there was a clean way to write in what the credit should be used for, that would also be helpful. I doubt very much that the intention was repayment of bridge loans or costs associated with recasting after an initial recoupment. Though such things are never as easy to make clear as I would wish. Loopholes always exist. It’s how producers of shows closed to the public before the shutdown got Shuttered Venue Operators Grants.

The Broadway League continues to campaign for an extension of the tax credit, as it should. We’ll know in a couple of months how successful that effort is and what revisions to the law will be made. Meanwhile, producers of shows that are beginning performances on or before December 1 can capitalize on the old law.