Hollywood Production Spending Shifted Abroad
Federal legislation was introduced to incentivize film production spending within the United States.
Updated on Oct. 5, 2026 in Manufacturing
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Should the federal government provide tax incentives to encourage film and television production in the U.S.?
Major studios have moved the majority of their production budgets outside the United States since the turn of the century. Industry groups are now pushing for a new federal tax incentive to reverse this decline.
Why it matters
The decline in domestic production has led to a significant loss of cast and crew jobs within the United States. Proponents argue that federal tax relief is necessary to restore the nation as a competitive production hub.
The share of film production budgets spent in the U.S. fell from 74% in 1999 to 42% in 2024. The survey included movies with budgets of at least $5 million and television episodes costing over $1 million.
The players
United States Congress
This is the legislative branch of the federal government responsible for debating and passing the proposed film production tax incentive bill.
Ernst Young
This is a global professional services firm that conducted the production spending survey for movies and television shows.
The details
The proposed bipartisan bill introduces a 20% base rate tax incentive on cast and crew spending for U.S.-based productions. If passed, the legislation could boost the incentive to 30% for specific projects and potentially double annual domestic production spending by 2035.
Timeline
Between 1999 and 2024, the share of domestic production spending dropped significantly.
A bipartisan film tax incentive bill was introduced in Congress in September 2026.
The federal government has set a target deadline of the end of 2026 for the bill's passage.
Annual domestic production spending is projected to double by 2035 if the incentive passes.
Market Landscape
The proposed legislation marks a direct policy intervention intended to reverse the multi-decade decline in domestic film production spending. This move aims to align the U.S. market with international hubs that have long utilized tax credits to capture production budgets.
The passage of this bill could lead to increased job availability for cast and crew members living in the United States. Additionally, it aims to stabilize local economies that rely on the presence of film and television production crews.
The takeaway
The proposed tax incentive highlights a strategic effort to reclaim lost market share in the global entertainment industry. If enacted, it could shift the economic landscape of domestic film production for the next decade.
What happens next
Congress has established a target deadline of the end of 2026 for the potential passage of the bipartisan film tax incentive legislation.
Further reading
For more context on industry trends, visit the Manufacturing section.
Live Poll
Should the federal government provide tax incentives to encourage film and television production in the U.S.?
