1. (a) The following are eligible expenditures:

   1. (1) Wages and per diems paid to Texas residents, including additional compensation paid as part of a contractual or collective bargaining agreement.

      1. (A) For the purpose of calculating the grant amount for feature films, video games, and commercials, only the first $50,000 in wages in a 12-month period to each Texas resident, and only the first $200,000 in wages in a 12-month period of each Texas resident working as a department head, will be included.
      2. (B) For the purpose of calculating the grant amount for episodic television, only the first $100,000 in wages in a 12-month period to each Texas resident, and only the first $200,000 in wages in a 12-month period of each Texas resident working as a department head, will be included.
   2. (2) Payments made to Texas companies for goods and services domiciled in Texas that are directly attributable to the physical production of the feature film, television program, commercial or video games. In the case of video games, the amount attributed to pre-production and research and development costs will be limited to an amount not to exceed 30% of the project's overall in-state spending.
   3. (3) Payments for shipping on items shipped from or within Texas.
   4. (4) Air travel to and from Texas on a Texas-based airline, including American Airlines, Continental Airlines and Southwest Airlines, or on a Texas-based air charter service.
   5. (5) Rentals, leases and purchases of vehicles registered and licensed in the State of Texas.
   6. (6) Music that is specifically created for the project and fees paid to Texas residents hired to create, orchestrate and perform the music.
   7. (7) Legal fees directly attributable to the production.

2. (b) The following are ineligible expenditures:

   1. (1) Payments made to non-Texas companies.
   2. (2) Payments made for goods and services not domiciled in Texas.
   3. (3) Payments made for goods and services that are not directly attributable to the physical production.
   4. (4) Payments made by video game projects for pre-production costs that exceed 30% of the project's overall in-state spending.
   5. (5) Expenses related to distribution, publicity, marketing, or promotion of the project.
   6. (6) Rental, Lease or Mortgage payments, that includes, but is not limited to utilities and insurance, on facilities that are part of the permanent/continuous business operation.
   7. (7) Wages and per diems paid to non-Texas residents.
   8. (8) Payments made to pass-through companies.
   9. (9) Fees for story rights, music rights or clearance rights.
3. (c) The Texas Film Commission reserves the right to determine which expenses are eligible or ineligible. These lists are not all inclusive.

Source Note:The provisions of this §121.5 adopted to be effective March 10, 2008, 33 TexReg 2019.