TITLE 13. CULTURAL RESOURCES

PART 8. TEXAS FILM COMMISSION

CHAPTER 121. TEXAS MOVING IMAGE INDUSTRY INCENTIVE PROGRAM

The Office of the Governor ("OOG") proposes amendments to 13 TAC §121.1, concerning Background and Purpose, §121.2, concerning Definitions, §121.3, concerning Eligible Projects, §121.4, concerning Ineligible Projects, §121.5, concerning Eligible and Ineligible In-State Spending, §121.6, concerning Grant Awards, §121.7, concerning Additional Grant Awards, §121.8, concerning Grant Application, §121.9, concerning Processing and Review of Applications, §121.10, concerning Disqualification of an Application, and §121.14, concerning Revocation and Recapture of Incentives. The OOG also proposes the repeal of §121.13, concerning Texas Heritage Project, elsewhere in this issue. The proposed amendments will make changes to better carry out the purpose of the program, respond to the evolving landscape of the industry in Texas, and improve readability and clarity.

EXPLANATION OF PROPOSED AMENDMENTS

The Texas Moving Image Industry Incentive Program ("TMIIIP") was implemented to increase employment opportunities for Texas industry professionals, encourage tourism to the state, and boost economic activity in Texas cities and the overall Texas economy. The 89th Legislature passed Senate Bill 22, which created the Texas Moving Image Industry Incentive Fund appropriating the Texas Moving Image Industry Incentive Program $300M each biennium until 2035. The new legislation also changed the residency threshold requirement for crew, actors, and extras from this state from 55% to 35% for the period of September 1, 2025, through August 31, 2027, to be increased by 5% each subsequent biennium until reaching 50% beginning on September 1, 2031. In addition, content requirements and additional grant awards were created for projects accepted into the program. The proposed amendments to §121.3 align the rule with section 485.023, Texas Government Code, as modified by the 89th Legislature. This rulemaking incorporates most of the changes made by Senate Bill 22, clarifies existing language, and makes other non-substantive updates for style and grammar.

The proposed amendments to §121.1 make non-substantive updates to style and grammar.

The proposed amendments to §121.2 add definitions related to changes made by Senate Bill 22, and modifies other definitions to better align them with the purpose of the program and to account for changes in the industry. The amendments also update outdated language and make non-substantive updates to style and grammar.

The proposed amendments to §121.3 clarify language related to activities that are eligible for TMIIIP grants and require applicants to follow all requirements and best practices set forth in the Texas Film Commission Program Guidelines. The amendments further update outdated language and make non-substantive updates to style and grammar.

The proposed amendments to §121.4 make clarifying changes, align language with the OOG's current procedures, and insert non-substantive updates to style and grammar.

The proposed amendments to §121.5 clarify the lists of eligible and ineligible in-state expenditures under the program. The proposed amendments also make non-substantive updates to style and grammar.

The proposed amendments to §121.6 revise the potential grant amounts and corresponding budget tiers for all eligible projects in accordance with changes made by Senate Bill 22. The proposed amendments also make non-substantive updates to style and grammar.

The proposed amendments to §121.7 add new grant categories to the existing options for Applicants to receive one or more additional grants, to the extent the total grant amounts do not exceed 31% of the total in-state spending. The additional options relate to: (1) the Rural Filming Grant; (2) the Texas Historic Site Grant; and (3) the Workforce Development Grant. Consistent with section 485.025 of the Texas Government Code, as amended by Senate Bill 22, the rules establish that an Applicant may qualify for multiple options, but may not receive additional grants in amounts that exceed 31% of the total in-state expenditures for the project. Senate Bill 22 also created the Texas Heritage Grant and Faith-Based Moving Image Project Grant; those additional incentives will be addressed in a future rulemaking by the OOG. The proposed amendments also make non-substantive updates to style and grammar.

The proposed amendments to §121.8 make non-substantive updates to style and grammar.

The proposed amendments to §121.9 remove unnecessary, redundant language and make other non-substantive updates to style and grammar.

The proposed amendments to §121.10 make non-substantive updates to style and grammar.

The proposed amendments to §121.14 make non-substantive updates to style and grammar.

FISCAL NOTE

Stephanie Whallon, Director, Texas Film Commission, has determined that during each of the first five years in which the proposed amendments are in effect, there will be expected fiscal impact on state and local governments as a result of enforcing or administering the proposed amendments.

Ms. Whallon anticipates a positive fiscal impact to the local and state economy due to increased production as a result of the proposed amendments. There is also an anticipated impact to the state's return on investment (ROI) calculation, specifically due to the lower residency requirements over the first five years. Any negative impact will decrease as the residency percentage requirements increase over time.

PUBLIC BENEFIT AND COSTS

Ms. Whallon has also determined that during each of the first five years in which the proposed amendments are in effect, the rule changes will yield the anticipated public benefit by lowering an eligibility requirement for a TMIIIP grant in order to expand the number of qualifying projects, specifically at the small to mid-size budget range.

Ms. Whallon has determined there are no measurable anticipated economic costs to persons required to comply with the proposed amendments.

There will be no adverse economic effect on small businesses, micro-businesses, or rural communities. Since the OOG has determined that the proposed rule will have no adverse economic effect on small businesses, micro-businesses, or rural communities, preparation of an Economic Impact Statement and a Regulatory Flexibility Analysis, as detailed under Texas Government Code §2006.002, is not required.

GOVERNMENT GROWTH IMPACT STATEMENT

Ms. Whallon has determined that during each of the first five years in which the proposed amendments are in effect, the amendments:

1) will not create or eliminate a government program;

2) will require the creation of new employee positions as approved by the legislature;

3) will not require an increase or decrease in future legislative appropriations to the OOG;

4) will not require an increase or decrease in fees paid to the OOG;

5) do not create a new regulation;

6) will expand certain existing regulations;

7) will not increase or decrease the number of individuals subject to the applicability of the rules; and

8) will positively affect the Texas economy.

TAKINGS IMPACT ASSESSMENT

The OOG has determined that no private real property interests are affected by the proposed rules, and the proposed rules do not restrict, limit, or impose a burden on an owner's rights to the owner's private real property that would otherwise exist in the absence of government action. As a result, the proposed amendments do not constitute a taking or require a takings impact assessment under Government Code §2007.043.

SUBMISSION OF COMMENTS

Written comments regarding the proposed rule amendments may be submitted for 30 days following the date of publication of this notice by mail to Stephanie Whallon, Office of the Governor, Texas Film Commission, P.O. Box 12428, Austin, Texas 78711, or by email to TFCRules.Comments@gov.texas.gov with the subject line "TMIIIP Rule Review." The deadline for receipt of comments is 5:00 p.m., Central Time, on March 15, 2026.

STATUTORY AUTHORITY

The amendments are proposed under Section 485.022 of the Texas Government Code, which requires the Texas Film Commission to develop procedures for the administration and calculation of grant awards under TMIIIP. The amendments are also proposed in accordance with Senate Bill 22, which took effect on September 1, 2025.

CROSS REFERENCE TO STATUTE

Chapter 485 of Texas Government Code. No other statutes, articles, or codes are affected by the proposed amendments.

§121.1. Background and Purpose.

(a) Background.

(1) The Texas Moving Image Industry Incentive Program administered by the Texas Film Commission (Commission) offers grants based upon eligible expenditures within the state by the Applicant, subject to this chapter [Chapter] and Chapter 485 of the Texas Government Code.

(2) Grants are available upon submission of all required documentation by the Applicant to the Commission, initial verification by the Commission, and a compliance review by the Office of the Governor. These grants are in addition to the sales tax exemptions described in sections [Sections] 151.318 and 151.3185 of the Texas Tax Code and §3.300 of Title 34 of the Texas Administrative Code.

(b) Purpose.

(1) The Texas Moving Image Industry Incentive Program increases employment opportunities for Texas industry professionals, encourages tourism to the state, and boosts economic activity in Texas cities and the overall Texas economy. Rather than being an exporter of talent, Texas attracts a wide range of projects from traditional film, television, and commercial productions, to technology-driven visual effects, animation, video games, and other digital interactive media productions.

(2) The Texas Moving Image Industry Incentive Program promotes the growth of the indigenous segments of media production, thereby encouraging Texas's talented workforce to stay in Texas and realize real professional growth in the industry. The program increases the value of the Texas workforce and the viability of the small businesses that rely on media production activity, increasing Texas's capacity to take on more production activity and increasing the state's competitive edge.

(3) The Texas Moving Image Industry Incentive Program is not intended for productions or projects that are permanently located in Texas, including, but not limited to, news productions, sports productions, and religious service productions.

§121.2. Definitions.

The following words and terms, when used in this chapter [Chapter], shall have the following meanings, unless the context clearly indicates otherwise:

(1) Applicant--

(A) For Feature Films, Television Programs, Visual Effects Projects for Feature Films or Television Programs, Reality Television Projects or Educational or Instructional Videos: either the Production Company producing the project or the owner of the copyright.

(B) For Commercials or Visual Effects Projects for Commercials: the Production Company, advertising agency, or client; provided, however, that if an advertising agency or client applies as the Applicant, but a Production Company expends the funds in the state in connection with a project, then either a chain of downstream payment from the Applicant to the Production Company or a production services agreement must be evidenced in connection with the submission of the Expended Budget.

(C) For Digital Interactive Media Productions: the Production Company, game or content developer, or game publisher.

(2) Business Day--A day other than Saturday, Sunday, or a Federal or State of Texas holiday.

(3) Cast--Actors paid by the Applicant to perform roles in Texas, including, but not limited to, featured actors, extras, stunt performers, voice-over talent, hosts, judges, announcers and roles or performers that appear on a recurring basis, but excluding talk show guests, game or contest show contestants, and litigants and witnesses in courtroom reality programs.

(4) Commercial--A live-action or animated-production advertisement, including, but not limited to, an individual advertisement, more than one advertisement created in a contiguous production period for the same client, a music video, or an infomercial that is made for the purpose of promoting a product, service, or idea and is produced for distribution via broadcast, cable, or any digital format, including, but not limited to, cable, satellite, Internet, or mobile electronic device.

(5) Crew--Independent contractors or employees paid by the Applicant to perform work in Texas that are directly contracted and credited for a specific position. An individual may work in more than one position on a production. Executive producers and/or permanent salaried employees of an Applicant who are listed on call sheets or production reports but not paid Wages on the project other than producing services, shall not be counted in Crew calculations for Texas Residency purposes. Vendors serving a traditional Crew [crew] function and providing personal services, but who are paid as independent contractors rather than through payroll, shall be counted in Crew calculations for Texas Residency purposes and must provide a Declaration of Texas Residency Form.

(6) Declaration of Texas Residency Form--A document promulgated by the [Texas Film] Commission [(Commission)] to be utilized by Applicants to prove the residency status of each Texas Resident employee, contractor, Crew, or Cast member.

(7) Digital Interactive Media Production--Software that provides a user or users with a game to play or other interactive technology experience for the purpose of entertainment or education, including for military or medical simulation training, and which is created for a game console or platform, personal computer, handheld console, or mobile electronic device used by a business or consumer [solely for bona fide amusement purposes as outlined in Section 47.01 of the Texas Penal Code].

(8) Educational or Instructional Video--An individual live-action or animated production, or a contiguous series of more than one live-action or animated production created for the same client, that is produced for exhibition in an educational or instructional setting.

(9) Episodic Television Series--A Television Program consisting of multiple episodes of a single season.

(10) Expended Budget--The final verifying documentation and worksheets submitted by an Applicant to the Commission at the completion of a project that shows the total eligible in-state spending, as defined insection [Section] 485.021(1), [of the] Texas Government Code, and includes all documentation considered by the Commission to be necessary to show compliance with the requirements of the Texas Moving Image Industry Incentive Program.

(11) Feature Film--Any live-action or animated for-profit production, including narrative and documentary productions, that is produced for distribution in theaters or via any digital format, including, but not limited to, DVD, Internet, or mobile electronic device.

(12) Filming Day--A day of Production [as defined in paragraph (18) of this section]. When calculating 60% of Filming Days for purposes of §121.3 of this chapter (related to Eligible Projects) [Chapter], but not for purposes of calculating a percentage [25%] of Filming Days for purposes of §121.7 of this chapter (related to Additional Grant Award) [Chapter], a Filming Day may include a traditional day of Production in live-action or digital media, as well as a concurrent day of Production conducted by a second unit, so long as:

(A) such second unit, is not a splinter unit, but is utilized for a bona fide, production-related purpose and would be recognized by the Directors Guild of America as a second unit; and

(B) a call sheet, and production report, for such day is circulated and executed in connection with the activities of such second unit. Any bona fide, second unit day shall be added to both the numerator of Texas days and the denominator of total days for purposes of calculating 60% of Filming Days for purposes of §121.3 of this chapter. [Chapter.]

(13) Man Hours--A unit of one hour's work by one person.

(14) Physical Production--The period encompassing Pre-Production, Production, and Postproduction.

(15) Postproduction--The period that occurs after the end of Production, including but not limited to, animation, bug-fixing, codebase completion, compositing, editing, lighting, music, patch-creation, sound, testing, and visual effects.

(16) Pre-Production--The period that occurs before the start of Production, including, but not limited to, casting actors, estimating budgets, mechanics, scouting locations, and testing story.

(17) Principal Start Date--

(A) For a live-action Feature Film, Television Program, Reality Television Project, Educational or Instructional Video, or Commercial project: the first day of principal photography.

(B) For a Digital Interactive Media Production, Visual Effects Project or animated project: the first day of asset creation (i.e., character or environment modeling and/or rigging).

(18) Production--

(A) For a live-action Feature Film, Television Program, Reality Television Project, Educational or Instructional Video or Commercial project: the period starting the first day of principal photography through the last day of principal photography.

(B) For a Digital Interactive Media Production, Visual Effects Project or animated project: the period starting the first day of asset creation or commencement of layout (i.e., character or environment modeling and/or rigging) through the last day of animation, code freeze, and/or final layout.

(19) Production Company--A company that engages in any of the activities included in Physical Production for a Feature Film, Television Program, Reality Television Project, Educational or Instructional Video, Commercial project, or Digital Interactive Media Production.

(21) [(20)] Reality Series--A Reality Television Project consisting of multiple episodes of a single season.

(22) [(21)] Reality Television Project--A live-action, for-profit production based upon unscripted content, including, but not limited to, a Reality Series, a contest or game show (to include individual episodes), or a talk show (to include individual episodes), that is produced for distribution via broadcast, cable, or any digital format, including, but not limited to, satellite, Internet, or mobile electronic device.

(24) [(22)] Television Program--An episodic, live-action or animated for-profit production that is produced in a narrative or documentary style, including, but not limited to, a television series, miniseries, limited series, television movie, television pilot, television episode, or a musical performance that is produced for distribution via broadcast, cable, or any digital format, including, but not limited to, satellite, Internet, or mobile electronic device (including a short narrative or documentary episode or series of episodes distributed initially as streamed content).

(28) [(24)] Texas Resident--An individual who is a permanent resident of Texas for at least 120 days prior to the Principal Start Date of the project and who has completed a Declaration of Texas Residency Form.

(29) [(25)] Underutilized and Economically Distressed Area--Has the meaning assigned to that term by Section 485.021, Texas Government Code.

(30) [(26)] Visual Effects Project--A self-contained production whereby computer generated images are created or manipulated to integrate with live-action footage of a Feature Film, Television Program, Educational or Instructional Video, or Commercial.

(31) [(27)] Wages--Compensation paid to an individual for work performed. Payment methods include, but are not limited to, direct payments, payments through an agent or agency, payments through a loan-out company or payments through a payroll service. Wages include, but are not limited to, gross wages, per diems (if signed for by the recipient), employer paid Social Security (Old Age, Survivors, and Disability Insurance (OASDI)) payments, employer paid Medicare (MEDI) payments, employer paid Federal Unemployment Insurance (FUI) payments, employer paid Texas State Unemployment Insurance (SUI) payments, employer paid pension, health and welfare payments, and employer paid vacation, [and] holiday pay, and sick leave. Only the first $5,000,000 [$1,000,000] in aggregate wages and/or compensation per person shall constitute eligible Wage expenditures.

§121.3. Eligible Projects.

(a) A project may be eligible for a grant under the Texas Moving Image Industry Incentive Program if it meets the stated minimum requirements listed in subsections [Subsections] (b) - (h) of this section [Section], is appropriate in content, and represents a potential economic impact in Texas, as assessed in §121.9(c)(3) of this chapter (related to Processing and Review of Applications) [Chapter], that is sufficient to justify acceptance in the program.

§121.4. Ineligible Projects.

(a) The following types of projects are not eligible for grants under this program:

(1) pornography or obscene material, as described [defined] by section [Section] 43.21 of the Texas Penal Code;

(2) news, current event or public access programming, political advertising, including public service announcements which advance a public policy or political position, or programs that include weather or market reports;

(3) local events or religious services;

(4) productions not intended for commercial, educational, or instructional distribution;

(5) sporting events or activities;

(6) awards shows, galas, telethons or programs that solicit funds;

(7) projects intended for undergraduate or graduate course credit;

(8) application software, system software, or middleware;

(9) casino-type video games and interactive digital media experiences used in a gambling device, as [such term is] defined by section [in Section] 47.01, [of the] Texas Penal Code; or

(10) Commercials or advertising for the State of Texas or any Texas state agency or department.

(b) The Texas Film Commission (Commission) is not required to act on any application and may deny an application or eventual grant payments because of inappropriate content or content that portrays Texas or Texans in a negative fashion, as determined by the Commission. In determining whether to act on or deny an application, the Commission shall consider general standards of decency and respect for the diverse beliefs and values of the citizens of Texas. As part of the preliminary application process, the Commission shall review the Content Document, as defined in §121.8(a)(1)(C) of this chapter (related to Grant Application) [Chapter and shall advise the potential Applicant on whether the content precludes the project from receiving a grant].

(c) Once an approved project has been completed, the Commission shall review the final content before issuing the grant payment to determine if any substantial changes occurred during Production to include content described by subsection [Subsection] (a) or (b) of this section [Section].

§121.5. Eligible and Ineligible In-State Spending.

(a) The following are eligible expenditures:

(1) Wages paid to Texas Residents for work performed in Texas, including additional compensation paid as part of a contractual or collective bargaining agreement.

(2) Additional compensation or reimbursements paid to Texas Residents, including, but not limited to:

(A) mileage or car allowance;

(B) housing allowance; and

(C) box or kit rentals for use of personal equipment.

(3) Workers compensation insurance premiums for Texas Residents, but only if the premiums are paid to a [Texas-based insurance] company operating a physical business location in Texas [or broker].

(4) Payroll company service fees for Texas Residents, but only if paid to a Texas-based payroll company that processes payroll within Texas.

(5) Payments made to Texas Domiciled Entities [-domiciled entities], sole proprietorships, or individuals for goods and services used in Texas that are directly attributable to the Physical Production of the project. In the case of Digital Interactive Media Productions, Visual Effects Projects, and animated projects, the amount attributable to Pre-Production and research and development costs shall be limited to an amount not to exceed 30% of the project's overall in-state spending.

(6) Payments for shipping on shipments originating in Texas.

(7) Air travel to and from Texas on a Texas-based airline or on a Texas-based air charter service, provided that an itemized receipt showing an itinerary and passenger name from the airline is provided confirming payment.

(8) Rentals of vehicles registered and licensed in the State of Texas or rented from a Texas Domiciled Entity [-domiciled entity] or sole proprietorship, including, but not limited to, national rental car companies operating [with] one or more physical business locations at verifiable [outlets in] Texas addresses that are not P.O. boxes.

(9) Fees paid to Texas Residents to compose, orchestrate, and perform music that is specifically created for the project.

(10) Legal fees directly attributable to the Physical Production of the project that are paid to Texas-based lawyers or law firms.

(11) Internet purchases, but only if purchased from an [a Texas-domiciled] entity or sole proprietorship or a retailer with a physical store or outlet in Texas. Items purchased must be shipped directly to Texas.

(12) Capital expenditures for purchases from a business or sole proprietorship physically located in Texas that are:

(A) less than $1,000 for an individual item [from a Texas-domiciled entity or sole proprietorship]; or

(B) equal to or greater than $1,000 for an individual item purchased that is not exhausted during the course of Production, so long as such item is sold or appropriately disposed of at the end of Production and evidence of such sale or disposition is furnished to the Texas Film Commission (Commission). Evidence of sale or disposition must show that only the difference between the purchase price and the sale price is submitted as an eligible expenditure and a copy of the check or receipt for the sale must be included as back up with the original purchase documentation.

(13) Location fees, if an executed location agreement by and between the Applicant and the location owner or owner's representative is provided to the Commission with the Applicant's Expended Budget.

(b) The following are ineligible expenditures:

(1) Payments made to [non-Texas-domiciled] entities, to include [or if] a sole proprietorship or individual, not having a physical location in Texas, and to non-Texas Residents.

(2) Payments made for goods and services not used in Texas.

(3) Payments made for goods and services that are not directly attributable to the Physical Production of the project.

(4) Payments made by Digital Interactive Media Productions, Visual Effects Projects, and animated projects for Pre-Production costs that exceed 30% of the project's overall in-state spending.

(5) Expenses related to distribution, publicity, marketing, or promotion of the project, including, but not limited to, promotional stills.

(6) Payments, other than properly allowable location fees, for facilities and automobiles that are part of a permanent/continuous business operation including, but not limited to, rental, lease or mortgage payments, utilities, software, and insurance.

(7) Wages paid to non-Texas Residents, including additional compensation paid as part of a contractual or collective bargaining agreement.

(8) Payments made to a company, entity, association, or person that acts as an agent or broker for companies, entities, associations, or persons outside of Texas to provide goods, services, or labor for the purpose of utilizing [taking advantage of] the Texas Moving Image Industry Incentive Program to their benefit (also known as "pass-through" entities).

(9) Fees for story rights, music rights, or clearance rights and licensing fees.

(10) Additional compensation or reimbursements paid to non-Texas Residents, including, but not limited to:

(A) mileage or car allowance;

(B) housing allowance; and

(C) box or kit rentals for use of personal equipment.

(11) Workers' compensation insurance payments for non-Texas Residents.

(12) Payroll company or workers' compensation company service fees [for non-Texas Residents or those] paid to a company that does not operate a physical business location in Texas [non-Texas-based payroll company].

(13) Payments for shipments originating outside of Texas.

(14) Payments for mobile and landline telephone service if the service [or billing] address is not in Texas.

(15) Payments for alcoholic beverages, cigarettes, and tobacco products.

(16) Payments to adult-oriented businesses or for adult-oriented material.

(17) Payments for entertainment, including, but not limited to, parties, event tickets, movies, hotel mini-bar items, meals unrelated to the Physical Production of the project, and personal gifts.

(18) Payments for tips and gratuities.

(19) Capital expenditures for an individual item over $1,000 which item is not exhausted during the course of Production, unless purchased in Texas [such purchase is from a Texas-domiciled entity or sole proprietorship], the item is sold at the end of the Production and evidence of such sale is furnished to the Commission. The documentation provided to the Commission must show that only the difference between the purchase price and the sale price is submitted as an eligible expenditure and a copy of the check or receipt for the sale should be included as back up with the original purchase documentation.

(20) Payments to any business that sells alcohol or tobacco products reflected on receipts which are not itemized, even if the submitted item itself is otherwise eligible.

(21) Any "talent handling fees," "overage fees," and "production fees" for a Commercial where the Applicant is a Production Company rather than the client or advertisement agency, other than the following items which must have been budgeted on the original, awarded bid to be eligible expenditures: the Applicant's insurance fees from the actual column of the actual Association of Independent Commercial Producers (AICP) budget (if it does not exceed the original, awarded bid and if a Texas-based insurance company or broker is used); editorial or Postproduction fees from the actual column of the AICP budget (if such fees do not exceed the Postproduction fees on the original, awarded bid); and any bona fide internal billing items which do not exceed the usual and customary cost of the goods or services, such as when Production Company employees work directly on the production using equipment and/or studio space owned by the Applicant that is ""rented"" to the production in lieu of using an outside vendor.

(22) Any payments made other than by the Applicant, including, but not limited to, payments made on behalf of the Applicant by a third party, unless a production services agreement or similar documentation is provided to show sufficient proof, as determined by the Commission in its sole discretion, of the relationship between the Applicant and the third party.

(c) The Commission has [reserves] the sole and exclusive authority [right] to determine which expenses are eligible or ineligible.

§121.6. Grant Awards.

(a) Feature Films, Television Programs, and Visual Effects Projects for Feature Films or Television Programs with total eligible in-state spending of:

(1) At least $250,000 but less than $1 million shall be eligible to receive a grant equal to 5% of eligible in-state spending.

(2) At least $1 million but less than $1.5 million [$3.5 million] shall be eligible to receive a grant equal to 10% of eligible in-state spending.

(3) At least $1.5 million [$3.5 million] shall be eligible to receive a grant equal to 25% [20%] of eligible in-state spending.

(b) Digital Interactive Media Productions with total eligible in-state spending of:

(1) At least $100,000 but less than $1 million shall be eligible to receive a grant equal to 5% of eligible in-state spending.

(2) At least $1 million but less than $1.5 million [$3.5 million] shall be eligible to receive a grant equal to 10% of eligible in-state spending.

(3) At least $1.5 million [$3.5 million] shall be eligible to receive a grant equal to 25% [20%] of eligible in-state spending.

(c) Reality Television Projects with total eligible in-state spending of:

(1) At least $250,000 but less than $1 million shall [will] be eligible to receive a grant equal to 5% of eligible in-state spending.

(2) At least $1 million shall [will] be eligible to receive a grant equal to 10% of [total] eligible in-state spending.

(d) Commercials, Educational or Instructional Videos, and Visual Effects Projects for Commercials or Educational or Instruction Videos with total eligible in-state spending of:

(1) At least $100,000 but less than $1 million shall [will] be eligible to receive a grant equal to 5% of eligible in-state spending.

(2) At least $1 million shall [will] be eligible to receive a grant equal to 10% of [total] eligible in-state spending.

§121.7. Additional Grant Awards [Award].

An applicant may [shall] be eligible for one or more [a single] additional grants. The total grant amount a project may receive will be [grant] equal to an amount no greater than 31% [2.5%] of total in-state spending by meeting one or more of the following:

(1) Rural Filming Grant--Projects that complete [Completing] at least 35% [25%] of [their] total Filming Days or Man Hours in a county in this state with a population of 300,000 or less may receive an additional 2.5% of total in-state spending[, as applicable, in Underutilized or Economically Distressed Areas (UEDAs)].

(2) Texas Veterans Grant--Projects demonstrating [Demonstrating] that 5% of the combined total of paid Crew and paid Cast, including extras, who are paid by the Applicant are Texas Resident Veterans may receive an additional 2.5% of total in-state spending. ["Veterans."]

(A) For purposes of this section [Section], a Veteran ["Veteran"] is a person who served in and has been honorably discharged from the United States Army, Navy, Marine Corps, Air Force, or Coast Guard; the National or Air National Guard of the United States; the Texas Army National Guard; the Texas Air National Guard; a Reserve component of any of the aforementioned military organizations; or any other military service that the Texas Film Commission (Commission) determines to be allowable.

(B) The Applicant shall submit sufficient information confirming the Veteran's status, including military-issued discharge documentation and other information requested by the Commission to support a determination that the person qualifies as a Veteran.

§121.8. Grant Application.

(a) Initial Submission

(1) A Qualifying Application includes:

(A) A completed Qualifying Application form for the Texas Moving Image Industry Incentive Program;

(B) An itemized budget detailing only estimated Texas expenditures; and

(C) A Content Document:

(i) for Feature Films, Television Programs (except Episodic Television Series) and Visual Effects Projects for Feature Films and Television Programs: the full script;

(ii) for Episodic Television Series: the full script of the first episode in the series to be filmed in Texas and, if requested, full scripts for subsequent episodes to be filmed in Texas;

(iii) for Commercials, Educational or Instructional Videos, and Visual Effects Projects for Commercials or Educational or Instructional Videos: the scripts, storyboards, or detailed outlines/summaries of content;

(iv) for Digital Interactive Media Productions: a summary of game content providing sufficient detail concerning the platform, themes, settings, story, characters, and events; or

(v) for Reality Television Projects: a detailed treatment or outline of program content.

(2) Application forms for each type of project are available by request to the Commission via telephone, Internet, or other means if additional special needs facilitation is required.

(3) Applications shall not be accepted earlier than 180 calendar days prior to a project's Principal Start Date.

(4) Applications must be received no later than 5:00 p.m. Central Time on the fifth Business Day prior to the Principal Start Date.

(5) Only one application by a single Applicant is allowed for a project.

(6) Within 5 Business Days of the Principal Start Date indicated on the Qualifying Application form, an Applicant for a Feature Film, Television Program, Reality Television Project, Digital Interactive Media Production, Visual Effects Project or Educational or Instructional Video must confirm with the Texas Film Commission (Commission) in writing, to include e-mail, that the production began on time. If the start of the project is delayed for more than 30 days, an application may be disqualified, and the Applicant may be required to reapply. If an Applicant fails to confirm that the production began on time within such 5 Business Day period, the Commission may, at its sole election but with no obligation to do so, disqualify the application.

(b) The Office of the Governor, as a state agency, must comply with the Texas Public Information Act (the "Act"). In the event that a public information request related to the Applicant and/or the application is submitted to the agency, the Office of the Governor shall notify the Applicant within a reasonable amount of time using the Applicant's most current contact information provided to the Commission.

§121.9. Processing and Review of Applications.

(a) All applications shall be reviewed in the order they are received.

(b) Initial Review.

(2) Applicants may amend information on their application. The Commission shall determine whether an Applicant's amendment(s) require the Applicant to reapply.

(c) Preliminary Eligibility Determination.

(1) During the preliminary eligibility determination process, the Commission shall review the project's Qualifying Application and budget to identify eligible expenditures and to determine if the Applicant meets the minimum program requirements for in-state spending, Texas Filming Days, and Texas Residency.

(2) The Commission shall also review the Content Document, as defined in §121.8(a)(1)(C) of this chapter (related to Grant Application) [Chapter], to determine if the content qualifies for program eligibility [is appropriate].

(3) The Commission shall examine the Qualifying Application in light of the following criteria to assess, in the aggregate, the potential magnitude of the economic impact of the project in the State of Texas:

(A) the financial viability of the Applicant and the likelihood of successful project execution and planned spending in the State of Texas;

(B) proposed spending on existing state production infrastructure, including soundstages and industry vendors;

(C) the number of Texas jobs estimated to be created by the project;

(D) the ability to promote Texas as a tourist destination through the conduct of the project and planned expenditure of funds;

(E) the magnitude of estimated expenditures in Texas; and

(F) whether the project will be directed or produced by an individual who is a Texas Resident, with the term "produced by" meaning a non-honorary producer who has direct involvement in the day-to-day production of the project above the level of line producer.

(4) The Commission shall notify the Applicant by e-mail that the Qualifying Application is approved if:

(A) the Qualifying Application meets all minimum program requirements for in-state spending, Texas Filming Days, and Texas Residency, as determined by the Commission;

(B) the Commission determines there will be sufficient economic impact of the project in the State of Texas based on the criteria specified in paragraph (3) of this subsection [Subsection];

(C) the Commission determines the content, as described in the Content Document, is appropriate;

(D) appropriated funds are available at such time of determination; and

(E) the Commission, in its sole discretion, elects to approve the Qualifying Application based on the totality of the circumstances.

(5) If the Commission denies a Qualifying Application, the Commission shall notify the Applicant by e-mail that the Qualifying Application is denied. The notice shall inform the Applicant whether the denial is based on failure to meet the minimum program requirements, insufficient economic impact, inappropriate content, or some other reason. Qualifying Applications shall be assessed in the order in which they are received.

(6) All funding decisions made by the Commission are final and are not subject to appeal.

(d) Grant Agreement.

(1) Upon Commission approval of the Qualifying Application, the Commission shall issue a conditional award letter, which shall be contingent upon execution of a grant agreement between the Office of the Governor and the Applicant. The estimated grant amount shall be based upon the Applicant's estimated in-state spending.

(2) The grant agreement must be returned to the Commission with original signatures. The Commission may disqualify a project for the Applicant's failure to return the grant agreement with original signatures.

(e) Periodic Tracking and Review. After the grant agreement has been executed by both parties, the Commission may periodically review production activity including, but not limited to, requesting quarterly reports that describe in-state spending, production locations, and number of Texas Residents hired, and may require documentation for all of the above.

(f) Encumbrance of Funds.

(1) The Office of the Governor will not encumber funds until an Applicant provides a completed W-9 and a Texas Application for Payee Identification Number Form.

(2) The amount encumbered for a project shall be equal to the estimated grant amount in the grant agreement.

(3) Provided sufficient funds are available, the Commission, in its sole discretion, may adjust the amount encumbered, but only if an Applicant amends the estimated Texas spending amount on their Qualifying Application in writing, prior to submitting their Expended Budget as described in §121.11 of this chapter (related to Confirmation and Verification of Texas Expenditures) [Chapter].

(g) Verifying Texas Residency.

(1) In order to verify Texas Residency, the Applicant shall provide the Commission with completed Declaration of Texas Residency Forms for each Texas Resident Crew and Cast member.

(2) Declaration of Texas Residency Forms are available on the Commission's web site or by request to the Commission via telephone, Internet, or other means if additional special needs facilitation is required.

(3) In the event that a Crew or Cast member possesses one of the documents specified in the Declaration of Texas Residency Form, but not for the required 120 days, Texas Residency may also be verified if:

(A) the project consists of at least 30 Filming Days; and

(B) the Applicant provides one of the following documents naming said Crew or Cast member and dated at least 120 days and no more than 13 months prior to the project's Principal Start Date:

(i) an executed HUD-1 settlement statement showing the purchase of residential real property located in Texas; or

(ii) a notice of appraised value or bill assessing property tax on residential real property located in Texas.

(4) If a Crew of Cast member does not possess any of the documents specified in the Declaration of Texas Residency Form, Texas Residency may also be verified by attaching to the Declaration a copy of their military ID card and their military orders that:

(A) name said Crew or Cast member, or their spouse, parent, or legal guardian, as applicable;

(B) show a permanent change of station to a military station in Texas; and

(C) are dated at least 120 days prior to the project's Principal Start Date.

(h) [Texas Film] Commission Logo. The Commission may require as a condition of the grant agreement that the Applicant must include the Texas Film Commission logo in the closing credits of a Feature Film, Reality Series or Television Production, or in the credits of a Digital Interactive Media Production.

§121.10. Disqualification of an Application.

(a) A Qualifying Application may be disqualified at any time if a project does not meet the necessary requirements or if a Qualifying Application is incomplete. If a Qualifying Application is disqualified, the Texas Film Commission (Commission) shall notify the Applicant by e-mail. Qualifying Applications that have been disqualified may be resubmitted with the required changes or additional information, no earlier than 180 calendar days before the Principal Start Date, and no later than 5:00 p.m. Central Time on the fifth Business Day preceding the Principal Start Date.

(b) In the event that the principal start or completion date is changed, the Applicant must notify the Commission in writing, to include e-mail, of the new principal start or completion date, and must provide sufficient reasoning for the change. If the start of the project is delayed two or more times or for more than 30 days, a Qualifying Application may be disqualified and the Applicant may be required to reapply.

(c) A Qualifying Application may be disqualified for reasons including, but not limited to:

(1) failure to submit required documents and notifications, or additional documents as requested or as required by this chapter [Chapter];

(2) failure to meet minimum requirements for in-state spending, number of Texas Residents hired, and/or percentage of Filming Days;

(3) submission of false information;

(4) inappropriate content as described in section [Section] 43.21 of the Texas Penal Code or content described by §121.4(b) of this chapter (related to Ineligible Projects) [Chapter];

(5) lack of available funding;

(6) ineligible project as listed in §121.4 of this chapter [Chapter];

(7) pursuant and subject to §121.8(a)(6) of this chapter (related to Grant Application) [Chapter], if an Applicant fails to confirm that the production began on time;

(8) lack of meaningful production activity on a project, as determined in the Commission's sole discretion, for a period of at least six months; or

(9) a written, voluntary notification by the Applicant to the Commission of the cancellation of the project.

§121.14. Revocation and Recapture of Incentives.

(a) An Applicant's eligibility for funds may be revoked after the project is completed for the reasons enumerated in §121.10(c) of this chapter (related to Disqualification of an Application) [Chapter] or in accordance with the grant agreement.

(b) If an Applicant has already received grant funds under this chapter [Chapter] and the Texas Film Commission (Commission) determines the Applicant does not meet a requirement, the Commission may require that the Applicant return any sum of the grant funds paid to the Applicant.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on February 2, 2026.

TRD-202600479

Stephanie Whallon

Director, Texas Film Commission

Texas Film Commission

Earliest possible date of adoption: March 15, 2026

For further information, please call: (512) 463-9200

The Office of the Governor ("OOG") proposes the repeal of 13 TAC §121.13, concerning Texas Heritage Project. The OOG identified the necessity of the proposed repeal while reviewing the rule in response to the passage of Senate Bill 22 (89-R), which significantly modified provisions of the Texas Moving Image Industry Incentive Program ("TMIIIP") statutes.

REASONED JUSTIFICATION

The Texas Moving Image Industry Incentive Program ("TMIIIP") was implemented to increase employment opportunities for Texas industry professionals, encourage tourism to the state, and boost economic activity in Texas cities and the overall Texas economy. The 89th Legislature passed Senate Bill 22, which among other actions, significantly modified the Texas Heritage Grant. In a future rulemaking, the OOG will propose a new rule regarding the Texas Heritage Grant, as well as another incentive created by Senate Bill 22, the Texas Faith-Based Moving Image Project grant.

FISCAL NOTE

Stephanie Whallon, Director, Texas Film Commission, has determined that during each year of the first five years in which the proposed amendments are in effect, there will be no expected fiscal impact on state and local governments as a result of enforcing or administering the proposed amendments.

PUBLIC BENEFIT

Ms. Whallon has determined that for each year of the first five years the proposed repeal is in effect, the public benefit will be consistency and clarity in the OOG's rules regarding the administration of certain additional incentive grants.

PROBABLE ECONOMIC COSTS

There will not be an effect on small businesses, microbusinesses or rural communities. There is no anticipated economic cost to persons who are required to comply with the proposed repealed rules

GOVERNMENT GROWTH IMPACT STATEMENT

Ms. Whallon has determined that during each year of the first five years in which the proposed repealed and new rules are in effect, the repeals and new rules:

1) will not create or eliminate a government program;

2) will not require the creation of new employee positions or the elimination of existing employee positions;

3) will not require an increase or decrease in future legislative appropriations to the OOG;

4) will not require an increase or decrease in fees paid to the OOG;

5) do not create new regulations;

6) will repeal existing regulations;

7) will not increase or decrease the number of individuals subject to the applicability of the rules; and

8) will not positively or adversely affect the Texas economy.

TAKINGS IMPACT ASSESSMENT

Ms. Whallon has determined that there are no private real property interests affected by the proposed repeal. Thus, the Office is not required to prepare a takings impact assessment pursuant to Section 2007.043, Texas Government Code.

REQUEST FOR PUBLIC COMMENTS

Written comments regarding the proposed rule amendments may be submitted for 30 days following the date of publication of this notice by mail to Stephanie Whallon, Office of the Governor, Texas Film Commission, P.O. Box 12428, Austin, Texas 78711, or by email to TFCRules.Comments@gov.texas.gov with the subject line "TMIIIP Rule Review." The deadline for receipt of comments is 5:00 p.m., Central Time, on March 15, 2026.

STATUTORY AUTHORITY.

The amendments are proposed under Section 485.022 of the Texas Government Code, which requires the Texas Film Commission to develop procedures for the administration and calculation of grant awards under TMIIIP. The amendments are also proposed in accordance with Senate Bill 22, which took effect on September 1, 2025.

CROSS REFERENCE TO STATUTE

13 TAC §121.13. No other statutes, articles, or codes are affected by the proposed repeals.

§121.13. Texas Heritage Project.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on February 2, 2026.

TRD-202600480

Stephanie Whallon

Director, Texas Film Commission

Texas Film Commission

Earliest possible date of adoption: March 15, 2026

For further information, please call: (512) 463-9200