October 17, 2026
Hollywood Could Get a Federal Tax Credit Worth Up to 30%. Here's How It Would Work.
Hollywood has spent years watching movies and television shows move production to countries offering lucrative tax incentives. Now, lawmakers from both parties want the federal government to fight back with a tax break of its own.
A bipartisan group of lawmakers has introduced the Motion Picture, Television, and Entertainment Revitalization Act, which would establish a new federal tax credit for qualifying film and television productions made in the United States.
The proposal starts with a 20% credit on qualifying U.S. labor costs, with additional incentives potentially pushing the credit as high as 30%.
And despite the obvious Hollywood connection, supporters are pitching it as much as a jobs and small-business bill as an entertainment-industry tax break.
How Would the Federal Film Tax Credit Work?Under the House version of the legislation, qualifying film and television productions could receive a base tax credit equal to 20% of eligible compensation paid for work performed in the United States.
To qualify, a production generally would need a total cost exceeding $1 million and at least 75% of its principal photography days would have to occur in the United States.
Eligible labor isn't limited to actors. The legislation specifically includes work performed by directors, producers, writers, camera operators, set designers, lighting and sound technicians, makeup artists, editors, visual-effects providers, and numerous other production workers.
Pre-production and post-production services can also qualify.
Some Productions Could Receive Up to 30%The 20% credit would be only the starting point.
The legislation includes several opportunities for an additional five percentage points, although the total credit rate couldn't exceed 30%.
Among them are bonuses for qualifying independent productions and projects filming significant portions in rural Opportunity Zones or federally declared disaster areas. The legislation also contains incentives related to increasing domestic production and producing projects across multiple states.
Visual-effects and post-production projects receive their own qualification rules, reflecting concerns that those jobs have also increasingly moved outside the United States.
Why Does Congress Want a Film Tax Credit?Increasingly, the United States is competing with other countries when it comes to film and television production dollars.
Canada, the United Kingdom, Australia, and other international production hubs offer financial incentives that can make shooting abroad considerably less expensive. According to the Los Angeles Times, 45% of U.S. films and scripted television shows were filmed internationally last year, up from roughly one-third in 2022.
States including California, Georgia, New York, and Louisiana already offer their own production incentives, but supporters argue that state programs alone can't compete effectively against national incentives offered overseas.
It's Not Just About Movie StarsWhen lawmakers talk about bringing film production back to the United States, they're emphasizing the people whose names never appear above the title.
A movie or television production can employ carpenters, electricians, costume designers, makeup artists, camera operators, drivers, construction workers, caterers, and hundreds of other workers.
Productions also spend money with local hotels, restaurants, rental companies, hardware stores, transportation providers, and other small businesses.
That's one reason the legislation has sponsors from states well beyond California. The original Senate sponsors include lawmakers from South Carolina, California, Texas, and Georgia, while the House coalition includes representatives from Texas, California, Georgia, Tennessee, Ohio, and New York.
Support has continued to grow since the bill's introduction, with additional senators from both parties joining the effort.
Would Every Production Qualify?No.
The proposed credit is specifically designed for qualifying commercial film and television productions. The bill excludes several types of programming, including news programs, live sporting events, talk and interview shows, game shows, award shows, and certain social-media content.
Advertising, marketing, promotional campaigns, fundraising productions, and content primarily intended for corporate or institutional use also would not qualify.
If enacted as currently written, the credit would apply to qualifying productions whose principal photography begins in taxable years starting after December 31, 2026.
Could the Credit Actually Become Law?It's too early to know.
The legislation was introduced on September 24 and has bipartisan sponsors in both the House and Senate. President Trump has also publicly called for Congress to establish federal incentives for domestic film and television production.
Supporters are hoping to advance the measure during the post-election session of Congress.
Remember, though, the tax credit is still only a proposal. Productions cannot claim it today, and the legislation could be changed substantially as it moves through Congress—or fail to pass altogether.
A federal film tax credit would represent a significant change in how the United States competes for movie and television production.
The proposed incentive could cover 20% to 30% of qualifying U.S. labor costs, but its impact could extend beyond studios and actors. When a production chooses one location over another, the decision can affect hundreds of workers and businesses that provide everything from construction and catering to lodging and transportation.
For now, Hollywood's federal tax credit is still waiting on Congress. But with bipartisan sponsors, growing Senate support, and backing from the White House, it's a tax proposal worth watching as lawmakers head toward their year-end agenda.
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