What to Know About the Proposed Federal Film Incentive

The proposed Motion Picture, Television, and Entertainment Revitalization Act would create a 20% federal tax credit on qualifying compensation for production services performed in the United States. Eligible productions could also receive increases bringing the total rate to 30%. The credit could be used against federal tax liability or sold to another taxpayer.

Production eligibility and qualifying compensation

The credit would cover qualifying U.S. compensation for cast, crew, writers, directors, producers, and eligible contractors. Qualifying pre-production and post-production services would also count.

Eligible commercial feature films, television pilots, and television seasons would need to:

• Have total production costs exceeding $1 million.
• Be completed during the taxable year.
• Have at least 75% of principal photography days in the United States.
• A television season would need at least four related episodes.
• Qualifying locations: At least 30% of principal photography days would need to take place in a qualifying rural Opportunity Zone or disaster area.
• Independent producer: The production would need to be completed by an independent producer.
• Multi-state producers: A producer would need to meet the bill’s requirements in at least 10 states, including at least 50% of a production’s principal photography days and at least $10 million in qualifying compensation in each state during the applicable period.
• Increased domestic production: To earn this bonus, the producer would need to complete more qualifying U.S. productions than it did in the tax year immediately before that first year. The number of additional U.S. productions required would be based on its average annual foreign-production count over the three tax years before the program starts: at least 30% of that average in year one, 40% in year two, and 50% in year three and every year after. The first program year would be the producer’s first tax year beginning after December 31, 2026.

Rate increases: up to 30% in total

Qualifying productions could also receive the below 5% increases. Applicable increases could be combined, subject to a maximum total credit rate of 30%:

VFX and Post-Production Routes for Federal Incentive

A production that does not meet the 75% U.S. principal-photography requirement could still qualify for the same federal credit through U.S. visual-effects or traditional post-production work. These are alternative qualification routes—not separate or additional credits.

• Visual effects: At least 75% of the production’s visual-effects costs would need to be incurred in the United States. The credit would apply only to qualifying U.S. compensation for visual-effects services.
• Traditional post-production: At least 75% of the production’s traditional post-production costs would need to be incurred in the United States. The credit would apply only to qualifying U.S. compensation for those services.

The categories would be tested separately; their costs would not be combined to meet the 75% threshold. The production would still need to meet the other requirements, including being an eligible production type, possessing total production costs exceeding $1 million, and completion during the taxable year.

Both the VFX and post-production routes start at 20%, with a total 5% increase available if the applicable rural/disaster-area or independent-producer uplift is met.

Traditional post-production includes editing, Foley, ADR, sound editing, scoring, credits, soundtrack production, and dubbing. Visual effects would be evaluated separately.

Using or selling the credit

The proposed incentive would be a transferable tax credit. Eligible producers could use the credit to reduce the federal income taxes they owe or sell it to another taxpayer.

When the credit would apply

If enacted as written, the credit would apply to productions whose principal photography begins in taxable years beginning after December 31, 2026.