Congress Drafts 20% Federal Film and TV Tax Credit, Stacking on State Incentives

Members of Congress are drafting legislation for a 20% federal tax credit on film and TV production labour, with bonuses that could push the rate to 30% — a credit that would sit on top of state incentives and, in some places, cover more than half a production's costs. The bill is expected to be introduced this month, possibly within the next two weeks, according to Variety.

President Trump endorsed the idea in a Truth Social post on 31 August, urging Congress to "approve, immediately, a Federal Production Incentive to create Entertainment Jobs in America," as reported by Deadline. He doubled down the following day. That endorsement is expected to unlock Republican support on Capitol Hill, where the effort has been quietly building for the past year.

The drafting is bipartisan. Republican Rep. Nathaniel Moran of East Texas and Democratic Rep. Linda Sanchez of Whittier, California, both on the House Ways and Means Committee, are leading the work. Democratic Rep. Laura Friedman of Burbank and Republican Rep. Brian Jack of the Atlanta suburbs have also been involved, according to Variety.

Here is how the credit would work. Productions get a base credit of 20% on all labour costs — both above-the-line (the writers, directors, producers and lead cast) and below-the-line (the crew who build the sets, run the cameras and drive the trucks). An extra 5% is available for meeting one of four criteria: filming in a rural opportunity zone, producing an independent project, bringing a certain amount of filming back to the U.S. from abroad, or spending at least $10 million across 10 different states in a single year. Producers can claim up to two of these uplifts, for a maximum of 30%.

The credit would stack on top of what states already offer. A production filming in a state with its own tax incentive could see combined subsidies of 60% or more, depending on location. The federal credit could be used to offset federal income tax or sold to another taxpayer, but it would not be refundable — meaning productions that owe no tax cannot simply collect a cheque from the Treasury.

Eligible projects would include reality TV, animation, films and scripted television. News and sports broadcasts would not qualify.

The Motion Picture Association and entertainment unions have been pushing for a federal incentive for the past year, arguing that the U.S. has been losing productions to countries with more generous subsidies — the U.K., Canada, Australia and others. The MPA is expected to release a report in the coming weeks arguing that film production creates a ripple effect benefiting local economies. Trump has argued the incentive's cost would be "made up tenfold by the money pouring into the Treasury's coffers," according to Variety.

The bill had not yet gone to the Joint Committee on Taxation for a cost estimate as of the Variety report's publication on 8 September, and the price tag is expected to run into the billions. California lawmakers had pushed for an extra bonus for productions filming in areas recently declared federal disaster zones, but that provision was not in the latest draft.

Some supporters are optimistic about passing the bill during the lame-duck session — the period after November's election when outgoing lawmakers still hold their seats — though it is seen as more likely to move next year.