Lights, camera, tax credits!

When developer Christopher Breakwell came to Wood River last year, he was selling a glittery dream to a gritty, blue-collar southwestern Illinois town in search of a renaissance — a Hollywood-style studio that would thrive in the shadows of aging refineries.

He envisions building a $95 million development that would provide sound stages to film production companies lured to the state by new legislation that allows them 45% of their expenditures or more back in income tax credits.

This puts Illinois at the top of the heap in the country, with New York, California and Georgia, in film tax credits offerings, according to industry magazine Wrapbook, which could mean billions of dollars of spending in the state, industry advocates say

The 105-acre site is within view of a Mississippi River levee, formerly home to an ammunition manufacturer’s headquarters and a recycling center. After clearing trees from the site, pouring foundations and installing prefabricated studios, he’s looking for a site to erect large white letters, reminiscent of the Hollywood sign in California, spelling out the name of his studio: “Hollywood River.”

“I was already looking at Illinois, and then the talk about the enhancements came. I mean, it certainly is the reason that we’re investing here,” Breakwell said of the tax credits. “Between the governor’s vision of the film tax incentive and the state legislature actually moving forward with it too, because you need both to get it done, as he said. The latest enhancements are amazing, and it really pushed, especially for downstate.”

Gov. JB Pritzker signed legislation last year providing enhanced incentives, expanding the base credits from 30 to 35% on resident labor and vendor spending. The governor made the move despite mounting evidence from academics who say these types of credits amount to corporate handouts that shift potentially hundreds of millions of dollars of fiscal burden to taxpayers while doing little to stimulate local economies.

“These incentives are a way for governors to curry favor with a small group of people in the industry who happen to live in their state while sending the tab to a much larger group of taxpayers,” University of Southern California public policy professor Michael Thom, who has studied tax credits, wrote in an email. “Your readers can decide if that’s good policy or just politics as usual.”

But people who work in the industry say the expanded incentives are needed to lure and keep film jobs in Illinois and stay competitive with global tax havens as well as other states that have increased their own film incentives.

“It’s mostly a difference between making a decent living and thinking I might have to move to a different location because there’s not enough work,” said Phillip Koch, a Chicago filmmaker whose production company used the tax credits to film music videos for the Smashing Pumpkins and Chance the Rapper. “It’s night and day.”

Illinois was an early adopter of film income tax credits. Under a law signed by Gov. Rod Blagojevich in 2003, the state began issuing them to qualifying productions as a proportion of their overall expenses. These credits, which can sometimes exceed millions of dollars per production, are typically then sold to insiders or wealthy corporations, with no ties to the film industry, who will use them to pay less in Illinois state income taxes.

In the past six years alone the state has issued nearly $1 billion in income tax credits under the program, shifting the tax burden onto the shoulders of state taxpayers to make up the difference. Recent tax credit buyers or recipients include large corporations such as Kraft Foods and U.S. Bank as well as prominent individuals, including JB Pritzker’s cousin, Jennifer Pritzker, Smashing Pumpkins founder Billy Corgan and Peng Zhao, the CEO of the multibillion-dollar Market Making firm Citadel Securities, once based in Illinois.

The largest tax credits were issued to production companies that filmed seasons of Chicago Fire, Chicago PD, Chicago Med on NBC, and Dark Matter on Apple TV.

Film expenditures in the state reached a record-breaking high of $703 million last year before the enhanced incentives, designed to stimulate the film industry’s growth downstate and outside Chicago, were signed into law.

“There’s some really great opportunities to build some of this industry in places that aren’t named Chicago or Cook County,” said Pritzker, at a news conference earlier this year at the Cinespace Studios in Chicago, where he announced the expanded incentives. “The industry itself wanted to have … more backdrops because not every scene is going to be a city street with a lot of people on it, or a lot of homes next to each other.”

While the credits are typically touted as boosting the TV and movie industry statewide, data shows that the tax incentive program also supports smaller budget projects, such as a $115,000 commercial filmed four years ago for Illinois House Democrats. Unlike other states that offer tax credits only for film production, commercials and music videos with as little as $50,000 budgets can qualify for Illinois’ program.

Since 2005, Illinois’ film tax credits have subsidized nearly 3,000 small-budget commercials such as advertisements for McDonald’s, Illinois Lotto and Kraft macaroni and cheese — nearly three times the number of television and movie projects combined.

Illinois Department of Commerce and Economic Opportunity spokesperson Eliza Glezer stated that the small budget commercials are a major economic driver. State officials pointed to one example — a Walgreen’s commercial filmed earlier this year in Chicago for $1.6 million.

But the larger set of incentives aimed at luring big budget productions, such as television series and movies, such as Dick Wolf’s “Law and Order” to Illinois are key to Breakwell’s business model.

The future of storytelling

Flanked by union leaders, lawmakers and even Chicago Fire actor Joe Miñoso, Pritzker stood in the backdrop of Cinespace Studios in March to celebrate Illinois’ film industry and one of the hallmarks of his economic agenda: the expanded film tax credits.

Their expansion would ensure that “the future of film, the future of storytelling, is going to be shaped” in Illinois, Pritzker said.

State records show that production companies that received the tax credits employed 153,000 people who worked as crew members and talent during the past two decades.

In 2022, Illinois added incentives for non-resident labor. Thirteen non-resident crew members and four to six non-resident actors are eligible for incentives. The number of actors depends on the size of the film’s budget.

Salary caps and limiting the number of non-residents eligible for credits creates an environment to lure small, independent productions that would hire Illinois workers and businesses, state officials said.

But two extensive studies of tax credits in the past decade have reached the same conclusion: the programs do little to stimulate the economy or create permanent jobs.

A 2018 study co-authored by Penn State University economics professor Mark Owens estimated that Illinois spent about $19,652 per job and received about $.22 in state revenue for every $1 of tax credit spent.

“The other side of this is almost every state is offering some kind of credit right now and so if you don’t offer it, you could be missing out on films that could be produced,” Owens said. “Whether it pays for itself, I have my doubts.”

Thom, the USC public policy professor, wrote a 2016 study that analyzed 40 states’ tax incentives designed to lure film productions out of California and New York from 1998 through 2013. It found that while the transferable tax credits had a small effect on movie production employment, there was no effect on wages or movie industry concentration.

“The general rule of thumb is that for every $1 taxpayers give Hollywood, taxpayers get back 10 to 20 cents,” he said. “Who would invest their money in something with that kind of a return on investment?”

But a study commissioned by the Illinois Production Alliance found that Illinois’ tax credit resulted in $6.81 overall return on investment for every dollar spent with $3.70 coming directly from productions filmed in Illinois. State officials said this resulted in more than $4.5 billion in economic activity from fiscal year 2017 to 2024 — with 94% attributed to the enhanced incentives.

The film tax credit has succeeded in “creating new jobs, attracting more productions and bolstering an important industry in Illinois’ economy,” while helping launch studios such as Hollywood River Studios in the Metro East, a DCEO spokesman said.

Separate from the economic impact, Thom said film tax credits can help forge relationships between ambitious politicians and wealthy studio heads.

Pritzker, who is courting a national audience in advance of the 2028 president race, has ties to California and traveled across the country ahead of the Democratic National Convention in Chicago in 2024 to hobnob with entertainment moguls on behalf of the Democratic party.

Pritzker also held meetings with Carol Turner, Disney’s head of television production, and Mike Posey, Netflix’s vice president of production for the United States and Canada, while the tax credit legislation was on his desk in December 2025 awaiting his signature, according to copies of his schedule obtained by Illinois Answers and CNI.

Weeks later, Pritzker appeared at Flyover Studios in Rantoul with Jennifer Shelby, president of Flyover. The studio formed in late 2024 in the decommissioned six-acre Chanute U.S. Air Force base. Artists such as Wiz Khalifa, Bryan Cranston and John Goodman have already filmed projects on the site.

Shelby said Flyover has benefitted from a 15% bonus for hiring workers from high-poverty or high-unemployment areas, plus a 5% bonus for hiring Illinois residents working outside the Chicago metro area — an incentive to film in places like Rantoul and Wood River.

Fees charged when the tax credits are issued also fund the state’s Film and TV Workforce Training Program, which helps supply entry level workers from places like Rantoul to film productions statewide.

“We would very much like to attract more people and do more training in some of the small towns that would fall under that and give them an opportunity to work and give the filmmakers additional tax credit that they can earn back,” Shelby said. “So, there are a lot of different spokes to the wheel to make this and work successfully, and we are trying to make sure we’re hitting all of them.”

Benefits for the wealthy and connected

Under Illinois’ film credit expansion that Pritzker signed, the percentage of the income tax credit increased from 30% of qualifying expenditures to 35% with added sweeteners that stack for green productions, productions that move into Illinois from other states, in addition to the extra credits for downstate and low-income locations.

“We’re trying to encourage those folks to do business in other parts of Illinois, so that we can employ people in other parts of Illinois,” Pritzker said.

The Illinois film credits, which will not expire until the end of 2038, have historically been uncapped, meaning that a production company could finance a movie for hundreds of millions of dollars that would be eligible for 35% or more of its expenditures in tax credits. The change in the state law promises a financial windfall for film productions, increased sales for the tax credit resellers, and greatly reduced tax liabilities for the credit recipients and buyers.

The way it works is that production companies apply for income tax credits based on a proportion of their expenses after filming ends. Usually, an accountant tallies the qualifying expenses and submits them to the Illinois Film Office, which reviews the expenditures for approval and issues the tax credits.

Production companies can take the credits for themselves or sell them to a broker who takes a commission when they sell them to buyers for 90% of face value, according to interviews with brokers. The buyers can then resell the tax credits or apply them to their income tax bills.

Records reviewed by Illinois Answers Project and Capitol News Illinois show the wealthy and connected benefiting from the state’s tax credits.

For example, William Pritzker, JB Pritzker’s cousin, was an executive producer on the 2025 feature film Pools, a coming-of-age drama, starring Odessa A’zion. The production company, Pools Film, had a production budget of about $950,000. The state of Illinois, in turn, issued the company an income tax credit of $274,000, which was transferred to William’s parent, Jennifer Pritzker. They did not respond to messages seeking comment.

The governor and his office have no knowledge of or role in individual film tax credit transfers, according to a Pritzker spokesman.

In a statement, DCEO said it does not determine who buys or receives the tax credits, but only provide support overseeing the transfers.

Peng Zhao, CEO of the hedge fund Citadel Securities, which has since moved from Illinois to Florida, purchased $13.7 million worth of income tax credits from 2021 to 2025, state records show.

And after producing the Smashing Pumpkins video “Beguiled,” Koch/Marschall Productions transferred the $15,553 income tax credit to band leader and longtime Highland Park resident Billy Corgan.

On the higher end of the spectrum, the 10th season of Chicago Fire, which was shot in 2021, had $104 million in Illinois expenses and the production company received a $30 million tax credit in 2025.

The credits can also be used as a financing tool for small productions, which can borrow against the anticipated tax credit to finance their projects.

Records show that about $250 million in film tax credits were issued to nearly 3,000 small commercial projects in the two decades. That’s more than the $170 million issued for 301 movies, but less than the $1.2 billion issued for nearly 767 television projects.

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Additionally, it creates a market for intermediaries to sell the tax credits from approved productions to purchasers for a 1 to 2% commission.

One of the state’s most prolific brokers, Credits and Incentives Corp., based in Puerto Rico, has sold more than $125 million million in Illinois tax credits. Its co-founder, Kenneth Blaine, said the business is “relationship based.”

“When you think about it at the corporate level, they are not going to buy tax credits from anybody off the street,” said Blaine, who sits on the board of the Illinois Production Alliance, a film production advocacy group. “You want to make sure they are a company that has a proven track record and reputation.”

Jake Prine, a Chicago-based tax consultant and budget strategist, said the process of submitting receipts for film tax credits requires a deep knowledge of the law and accounting, a niche specialty.

Handling these types of transactions is “very lucrative” for the few people who do it, Prine said.

And it can be beneficial for the buyers as well, who are able to reduce their state income tax liability.

The largest buyer in recent years is U.S. Bank, which has purchased $70 million in income tax credits from 2021 to 2025, state records show. That means that the bank, which in 2024 had a net income of $7.6 billion  and more than 160 locations in Chicago alone, could use those credits to pay less in taxes that support schools, pensions and other state services, shifting the burden to other regular Illinois residents and businesses.

A U.S. Bank spokesperson said that by purchasing these credits, the company funds films and carries out the Illinois film tax credit’s mission by “creating jobs and generating economic activity in Illinois.”

It’s a wrap

Even though the new incentives went into effect earlier this year, the state is already seeing investment in film production.

Start-up studios have popped up in Rock Island and Rantoul and Breakwell’s studio in Wood River is scheduled to be up and running in the fall.

Breakwell isn’t a stranger to the entertainment business. As a former executive at JPMorganChase, he was the banker for former National Football League’s Rams owner Georgia Frontiere.

After helping Frontiere’s son, Dale “Chip” Rosenbloom, finance the movie “Alice Upside Down”, filmed in St. Louis with Penny Marshall and Luke Perry, Breakwell went on to run 31st Street Studios in Pittsburgh. At its peak, the studio was used in the filming of such blockbuster films as “Avatar” and “The Dark Knight Rises” and the Netflix series “Mindhunter.”

But Breakwell’s company that ran the studio, Gateway Entertainment Studios, fell on hard times and declared bankruptcy in 2016, listing $12.1 million in assets and $9.9 million in liabilities, court records show. The studio, which fell into disrepair due to alleged water leaks, owed $147,000 to the city of Pittsburgh and $9,400 to Allegheny County in addition to hundreds of thousands of dollars owed to contractors, law firms and other vendors. Those debts were satisfied before Breakwell sold the studio for $14 million in 2017.

In an interview at his offices in Granite City, Breakwell blamed Pennsylvania politics and the legislature’s lack of continuing support for the studio’s sale. Pennsylvania made available $60 million in annual film tax credits before and during the studio’s bankruptcy.

Breakwell says his Illinois venture will be different. He will operate solely as a vendor — running  the studio, supplying subcontractors, transportation and logistical support to film producers and potentially offering financing. In addition, he says he plans to build an E-Gaming stadium, a hotel and recording studios.

He’s optimistic this project will succeed.

“The key for us downstate is to just get on their radar and provide them knowing that we’re right across from St Louis. … There’s so many things to shoot, and even Southern Illinois, it’s just beautiful. You can do anything over there,” Breakwell said.

The city of Wood River, where nearly 14% of the population of 10,000 lives in poverty, is taking the risk. The city has an annual budget of $28 million and is desperate for an economic driver to replace the blue-collar jobs lost over decades.

To lure Breakwell, the city sold the property to him for $1 million, and City Manager Steve Palen put together a tax-increment financing package to reimburse 90% of the project’s development costs. Those reimbursements are capped at $50 million and will sunset in 2042 when the district expires.

The city council passed the deal unanimously, but board member Bill Dettmers called the agreement “not very well put together” and argued for clawbacks in case the project fails.

“There’s not a definitive provision in there on what has to be done, in order for us to buy the property back,” said Dettmers, who nevertheless voted to approve the deal.

While the development is still under construction, Breakwell said one studio has already expressed interest in filming a series at Hollywood River Studios — with an “A-list” actor, a project that could start as early as this fall.

Will Wood River soon see George Clooney or Emma Stone at the local coffee house Roasterz or the downtown restaurant Burger Bar? Palen believes it’s possible.

“This is going to be a boon for our town,” Palen said.

Capitol News Illinois is a nonprofit, nonpartisan news service that distributes state government coverage to hundreds of news outlets statewide. It is funded primarily by the Illinois Press Foundation and the Robert R. McCormick Foundation.