The United States has never had a federal production incentive. Every other serious production country figured this out years ago.
That is the whole reason runaway production exists. Canada offers federal credits and provincial credits on top, the UK has one, Australia has one, and an American producer comparing bids is comparing a stack against a single layer. Last year 45% of American films and scripted shows shot internationally, up from roughly a third in 2022. Los Angeles County shoot days dropped another 13% in the second quarter. The work is not disappearing. It is relocating to wherever the spreadsheet says it should.
For the first time, Washington is seriously drafting an answer. It even has a name: the Motion Picture, Television, and Entertainment Revitalization Act. The name came from President Trump, who endorsed the effort on Truth Social after meeting with Jon Voight, and the drafting is happening now with members of both parties at the table.
The working figure is a 20% federal tax credit on labor costs. Not on total spend. On labor, both below the line and above it, which means crew wages and actor and director salaries alike.
On top of that base, the credit could rise another 5 to 10 points if a production shoots in rural areas or spreads its spending across several states. That structure is borrowed straight from the state playbook. California and New York both bought rural votes for their programs by paying a bonus for filming outside their production hubs, and the federal draft is running the same play at national scale.
Two design details matter more than the headline number. The credit would be transferable, meaning a production company with no federal tax liability could sell it to someone who has one. And it would not be refundable, so nobody is getting a check from Treasury. Transferable but not refundable is a familiar shape if you have worked with state credits, and the brokers who move Georgia credits around will recognize the business model immediately.
Eligibility is broader than I expected. Films and scripted television, but also reality and animation. News and sports are out.
The piece that changes the math most is stacking. The federal credit is designed to sit on top of state incentives, the way Canada's federal credit sits on top of British Columbia's or Ontario's. That is the exact mechanism that has been pulling American work north for twenty years, finally pointed in the other direction.
Stack it and the arithmetic gets loud. California's expanded program pays a 35% base credit on qualified spend, with a $750 million annual pot. But California, like most states, does not count above-the-line salaries toward the credit. The federal draft does.
So picture a scripted feature budgeted in Los Angeles next year under both programs. The state credit covers qualified below-the-line spend at 35%. The federal credit covers labor at 20%, including the cast salaries the state program ignores, with the possibility of more if some of the schedule moves to a rural unit. Every labor line in that budget is suddenly working twice.
I build budgets for a living, and I built AIbudget because the incentive line is never a footnote. It is a number the whole finance plan gets constructed around. A labor-based federal credit is computed directly off the labor sections of a bid, the same lines every producer already fills in, which makes it the rare incentive you can estimate without hiring a consultant. When this passes in any form, the day-one question for every producer is what their labor total is worth in credit, and that answer is already sitting in their budget.
That is also why the offshoring number is 45% and climbing. These decisions get made in a spreadsheet months before anyone books a stage. Change the spreadsheet and you change where the trucks park.
The coalition is wider than this issue has ever had. Senator Adam Schiff has spent two years building bipartisan support for a federal incentive, and his earlier framework, a 15 to 20% labor-based credit with bonuses for independent productions, is clearly the skeleton of what is being drafted now. In the House it is Linda Sanchez of California and Laura Friedman of Glendale on the Democratic side, with Nathaniel Moran of Texas and Brian Jack of Georgia on the Republican side. Moran and Sanchez both sit on Ways and Means, which is the committee this has to move through.
Note the states in that list. Texas and Georgia are production states now, and their members have constituents who lose work to Vancouver and London the same as ours do. That is what makes this round different. It is not a Hollywood ask anymore.
SAG-AFTRA, the DGA, IATSE, and the Motion Picture Association are all publicly behind it. Friedman put the case simply: with a level playing field, productions come back.
As of this week, a Schiff spokesperson says leaders in the Senate, the House, and the administration are engaging in conversations to finalize text, and that negotiations are ongoing. That is real movement. It is also not a bill yet.
I have watched too many incentive fixes die in committee to write the victory lap early, and our own state just demonstrated how fast a sure thing can wobble. Here is the honest obstacle list.
The calendar is the big one. Congress leaves for the midterms within days, and Washington effectively empties out from October to mid-November. A bill that has not been introduced before the break is not moving before the break.
The price tag is the second one. A multibillion-dollar credit has to be scored by the Joint Committee on Taxation and has to survive the search for offsets, and there is no draft score because there is no draft text. Every percentage in this post is a working figure until legislative language exists. Working figures have a way of shrinking.
And the coalition, wide as it is, is held together by an unusual mix of interests. It survived the drafting stage. It has not yet survived a floor fight.
Commercials are not on the eligibility list, the same as the state program, so FS MEDIA will not claim a dollar of this credit under any version of it. My stake is the one I wrote about in August: whether the crews I hire have work in the months I am not hiring them, whether the vendors I rent from have volume, and whether the stages in this city stay busy. A federal credit that brings scripted work back to Los Angeles does more for that ecosystem than anything the city or the state has tried in a decade.
So here is my practical advice, as someone who spends his days in budget spreadsheets. Watch this closely, and do not budget it yet. A credit that exists as a working figure in a negotiation is not a line item. The moment there is introduced text with a rate in it, run your labor totals against it and see what your next job looks like with the stack. Until then it is momentum, and momentum is real, but you cannot finance against it.
The last time this industry had a genuinely bipartisan, White House-backed, union-backed shot at a federal incentive is never. That is worth paying attention to. Check back after the midterms.