Film Production Spending in U.S. Fell to 42% of Budgets
Studios and labor unions seek a new federal tax incentive to reverse the long-term decline in domestic production.
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.?
The share of major film production budgets spent within the United States dropped from 74% in 1999 to 42% in 2024. Industry leaders and unions are now pushing for a federal tax incentive to restore domestic competitiveness.
Why it matters
Declining domestic production affects the thousands of small businesses that provide catering, equipment, and location services to the entertainment industry. Proponents argue that a tax credit is necessary to prevent further capital flight and restore domestic jobs.
The share of film production spending in the U.S. fell to 42% in 2024 compared to 74% in 1999, while television production spending dropped to 64% from 94% over the same period. A bipartisan bill introduced in September 2026 proposes a 20% base rate incentive for domestic productions.
The players
Congress
The federal legislative body currently weighing a bipartisan bill to implement a new film production tax incentive.
Ernst Young
A global professional services firm that conducted the industry-wide survey regarding production budget allocation.
The details
The proposed federal incentive aims to lower costs for studios producing movies with budgets exceeding $5 million and television episodes costing over $1 million. By offering a 20% base rate on cast and crew spending, proponents believe they can stabilize domestic labor demand, which has seen crew participation drop significantly since the late 1990s. If passed, the legislation would allow for a tiered system where specific productions could reach an incentive rate of up to 30%.
Timeline
The study analyzed production trends between 1999 and 2024.
A bipartisan film tax incentive bill was introduced in Congress in September 2026.
The target deadline for passage of the federal tax incentive is the end of 2026.
Annual domestic film production spending is projected to potentially double by 2035.
Market Landscape
The proposed federal film tax incentive follows a broader pattern of industrial policy where the government uses tax levers to influence high-value sectors. This effort aligns with similar fiscal interventions designed to reclaim domestic capacity, such as the Inflation Reduction Act.
Operators in production-dependent regions should monitor the progress of the tax bill through the end of 2026 to gauge potential shifts in client demand. If passed, the incentive may trigger a surge in domestic filming activity, increasing the need for local services and equipment.
The takeaway
The sharp decline in U.S.-based filming signals an ongoing need for entertainment-adjacent businesses to diversify their client base. Owners should monitor the end-of-year legislative calendar to determine if new federal incentives will materialize by the start of 2027.
Further reading
For more on the challenges facing domestic production hubs, see Manufacturing.
Live Poll
Should the federal government provide tax incentives to encourage film and television production in the U.S.?
