Trends in Film & TV Tax Incentives in the U.S. and Beyond

More than 20 years after the introduction of tax credits, refunds, rebates, and other incentives in the U.S., we’re seeing a handful of state program trends that are shaping the production landscape.

On one hand, some states are expanding their programs. Recently, Governor Gavin Newsom promised to increase the size of California’s successful program to $750 million per year, more than doubling the size of the current offering. 

Last year, New York did something similar, increasing the Empire State incentive from $420 million to $700 million. The impetus for the revised program was to speed up payouts for long-waiting productions and entice producers to return to New York from New Jersey. New York’s neighbor has been making quite an impression with filmmakers in recent years, and with the Empire State’s increased incentives, New Jersey shot back, augmenting its rates to nearly 40%.

But on the other hand, states such as Louisiana have looked to pull back. The state that first brought incentives to the U.S. market in 2002 recently elected to undergo major tax reform at the urging of the new Governor, Jeff Landry. Landry’s plan was to lower and flatten tax rates, while making up the lost revenue by axing several incentive programs, including the popular film tax credit. 

However, the people of Louisiana rejected that proposal, and the film incentive experienced a modest cut, dropping to $125 million from $150 million annually. 

Georgia also considered curtailing its industry-leading incentive—estimated to exceed $1 billion annually—but the measure was defeated handily.

In a nutshell, the trend towards expansion, or rejection of limitations, sets the tone for 2025 with other programs electing expansion and improvement, such as Colorado, Illinois, Missouri, and Ohio. But there are a few other trends that are harder to spot. 

First, the states seem to be customizing their programs to suit their particular needs, strengths, and interests. Whether it’s promoting investment in physical infrastructure, digital/virtual production, diversity, or studio partnerships, the days of copy-pasting sister-state programs are long gone. Instead, they’ve been replaced by plans tailor-made to appeal to local constituencies and complement the state economy. In a sense, that’s what you’d expect as the incentive landscape across the country matures.

Yet due to inflation, renegotiated guild rates, and other macro-economic factors like high interest rates and a strong U.S. dollar, it’s now more expensive than ever to film in-country. 

Productions large and small, as well as the major studios, are looking to international programs from Malta to Hungary to Saudi Arabia, where labor is inexpensive and new incentive programs abound. The trend of runaway production through 2025 will likely continue. Around conference tables at the banks, studios, and capital providers, the question of how to establish toe-holds in foreign markets tops the agenda.

If the U.S. wants to stem the flow of runaway production, the answer may not rest with the cash-strapped states. Rather, an option to consider would be a reliable federal program that goes beyond the nation’s current Section 181 for qualified film and television production costs. 

A workable federal program would likely compare to the tax credits offered for renewable energy investment, which are freely transferable and can therefore be exchanged among businesses or used to entice private investment. Even a small federal tax credit for film and television would turn the tide, and the hundreds of billions of dollars that annually flow with it.