Hollywood would get 20% federal film tax credit under proposed new bill

A bipartisan group of Congressional leaders officially introduced a bill to create a federal film and television tax credit, a long-sought goal for many in Hollywood who say it’s necessary to help bring production back to the U.S.

The bill, known as the Motion Picture, Television and Entertainment Revitalization Act, would establish a 20% tax credit on U.S. labor for eligible film and TV productions, including post-production and visual effects work. The uncapped credit would cover labor expenses for production crews as well as so-called above-the-line costs, such as salaries for actors and writers.

That credit could increase to 30% with several uplifts, including 5% bonus credits for independent productions or those that film at least 30% of principal photography days in a rural qualified opportunity zone or a federally declared disaster area.

Productions that film at least half of their days and spend at least $10 million in qualified compensation in 10 or more states also could qualify for an additional uplift.

Feature films, TV shows or TV pilots would qualify for the tax credit if their total cost is more than $1 million and 75% of the principal filming days occur in the U.S., according to the bill. Live sports, daytime dramas, talk shows, news, social media content and advertising and corporate videos would not be eligible.

The effort is being led on the House side by Reps. Nathaniel Moran (R-Texas), Linda Sánchez (D-Whittier), Brian Jack (R-Ga.) and Laura Friedman (D-Glendale), and on the Senate side by Sens. Tim Scott (R-S.C.) and Adam Schiff (D-Calif).

“We have never been closer to getting this done than today,” Schiff told reporters during a news conference Thursday. “We have this rare confluence of events that makes this very possible.”

A group of lawmakers, industry groups and Hollywood unions have been quietly working behind the scenes for more than a year to build momentum for a federal film tax credit.

Several industry groups and unions issued statements of support for the bill, including the Producers Guild of America, the Directors Guild of America and the International Alliance of Theatrical Stage Employees, which represents film crews.

“It would be transformative for our members’ future work opportunities and economic well-being after years of scarcity,” IATSE said in a statement.

SAG-AFTRA President Sean Astin said in statement “the bipartisan support for this bill has me optimistic that we will, at long last, get a federal tax incentive that will make us competitive with the rest of the world.”

The effort got a major boost last month when President Trump signaled his support after meeting with actor Jon Voight, who he has appointed as one of his Hollywood ambassadors.

“This is a signature industry for the United States, and certainly for us in Los Angeles,” Friedman said during the news conference. “It’s been a really hard couple of years for L.A. with the fires, with what’s been happening economically. There’s a lot of uncertainty, a lot of anxiety ... and this is one source that I think people should be very optimistic about.”

Supporters point to the increasing number of productions that have left the U.S., lured by more extensive incentives offered by other countries, including the United Kingdom, Ireland and Canada.

At least 65 nations offer film and TV tax credits, according to a recent study commissioned by the Motion Picture Assn. trade group, which is backing a U.S. federal incentive. The study said a federal film tax credit could increase U.S. production spending by $125 billion and add more than 143,000 jobs by 2035.

Motion Picture Assn. Chief Executive Charles Rivkin described the incentive as a “true game changer” in a statement Thursday, saying that it would fuel job growth and make the U.S. “a more competitive destination for the next generation of great film and television.”

It’s not clear, however, how much of that spending would flow back to California — which has been especially hard hit by the exodus of production — since dozens of other states including New York, New Jersey and Georgia also compete for Hollywood’s business and have established film crews and studios.

But stacking a federal tax credit on top of the newly bolstered California production incentives could help give the state an edge when producers are pricing out location shoots, industry experts say.

And the inclusion of post-production work in the federal incentive language also could help California, as the state recently passed its own tax credit focused on luring back editing, sound mixing, composing and visual effects jobs. And since L.A. County has been declared a disaster zone, production there could qualify for a bonus credit.

Passage of the measure may be possible after the Nov. 3 election, Schiff predicted.

“We need to seize the opportunity to get something done for the country,” he said. “But it is rare.”

The White House did not immediately respond to a request seeking comment. But lawmakers who are co-sponsoring the measure said they have been in close contact with the White House about all the details in the proposed legislation and that they are not aware of “any red flags.”

They worked on some “last-minute tweaks” in conjunction with the White House before filing the legislation on Thursday, Schiff said, though he did not specify what those revisions were.

“As far as I can tell, all signals are a go,” he said.