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- Apr 14
- 4 min read
April 14, 2026
IS A FEDERAL FILM TAX CREDIT FINALLY ON THE HORIZON?
Why Hollywood’s Offshoring Problem Might Push Congress to Act
For years, the U.S. has watched its own film and TV productions pack their bags, grab their passports, and head abroad. Canada, the United Kingdom, Australia, New Zealand, and South Africa are winning the global production race with rich national incentives — while the U.S. has relied almost entirely on a patchwork of state programs to stay competitive.
But 2026 feels different. There’s real movement — or at least real noise — around the idea of a federal film tax credit. And if you’re a producer, lender, or anyone who’s tired of explaining to clients why their “American story” is being shot in Vancouver again, this is a conversation worth watching.
Let’s break down what’s happening.
Aggressive Offshoring
A recent Los Angeles Times analysis of the global production race highlights what many of us have been seeing for years: the U.S. is losing projects to countries offering national level incentives, streamlined permitting, and fully built out infrastructure.
The article underscores a simple truth: state incentives alone can’t compete with countries offering 25–40% national credits. This offshoring trend is exactly what’s fueling renewed calls for a federal solution.
So… Is Congress Actually Doing Anything?
1. H.R. 4787: A Federal Signal Worth Paying Attention To
In 2025, Rep. Judy Chu introduced H.R. 4787, a bill that would extend and expand the federal production deduction under Internal Revenue Code Section 181 style.
Here’s what it proposed:
Extend the deduction through 2030
Increase the maximum deductible production cost from $15M → $30M
Add an inflation adjustment beginning in 2026
Apply only to productions beginning after enactment
However, this incentive was introduced and referred to the House Ways & Means Committee, but no further action was taken. The introduction of H.R. 4787 signals that federal lawmakers are being asked — loudly — to revisit national support for domestic production. In other words: the door is open for us to advocate for an incentive.
2. Section 181 Expired — and Its Replacement Is Stuck in Congress
Section 181 expired at the end of 2025, leaving producers without the only federal level incentive they had.
Right now, Section 181 is bundled into the CREATE Act, a broader bill introduced in 2025 that would revive and strengthen the deduction. But the CREATE Act has not passed, and there’s no clear timeline for movement.
This vacuum — no federal deduction, no federal credit — is adding pressure for a more comprehensive national solution.
3. A Draft Federal Tax Credit Is Circulating Behind the Scenes
Industry groups, studios, and labor organizations have been circulating a draft “Universal Federal Film Tax Credit Bill” that pairs a nationwide incentive with infrastructure investment.
While the draft isn’t public, multiple industry briefings and policy summaries consistently reference a 20–30% base federal credit. This range is intentional — it’s designed to make the U.S. competitive with other countries offering national incentives.
How the 20–30% Range Compares Globally
The proposed federal percentage isn’t random. It aligns with the national incentives offered by the countries currently winning the global production race:
Canada: 16–25% federal incentives
United Kingdom: 25%
Australia: 30%
Mexico: 30% federal credit (launched in 2026)
A U.S. federal credit in the 20–30% range would put America squarely back in the competitive set — especially when stacked with state incentives.
Why a Federal Credit Is Suddenly More Plausible
A few forces are converging:
Global competition is fierce — and the U.S. is losing.
States are maxed out — some are even sunsetting or capping programs.
Offshoring is now a political issue, not just an industry one.
Labor unions, studios, and independents are aligned for once.
Congress is already touching the tax code (H.R. 4787, CREATE Act).
The media narrative has shifted — this is now about jobs and economic impact, not Hollywood glamour.
When the narrative shifts from “movie stars” to “workforce and infrastructure,” Congress tends to listen.
What a Federal Credit Could Look Like
Based on the draft circulating and industry chatter, a federal incentive might include:
A 20–30% base credit on qualified U.S. spend
Stackability with state credits
Nationwide workforce development funding
Support for independent productions, not just studio tentpoles
Even without uplifts, this structure would be transformative.
What Producers Should Do Right Now
Even though nothing is official yet, here’s how to stay ahead:
Track federal developments — the conversation is moving quickly.
Model budgets with and without a federal layer — equity investors and lenders may ask.
Watch offshoring trends — they’re driving the policy narrative.
Stay close to your state incentives — they’ll remain essential even if a federal credit passes.
And if you’re an independent producer, this is the moment to get loud. Federal policymakers are listening to the “jobs and economic impact” argument more than ever.
Conclusion
A federal film tax credit isn’t guaranteed — but for the first time in a long time, it feels possible. The pressure is real, the economics are undeniable, and the industry is unusually aligned. If the U.S. wants to keep production jobs at home, a national incentive may be the only meaningful solution left. If you want to be a part of the discussion, please don’t hesitate to shoot an email to info@bankableconsultants.com.
