Congress Moves Toward a Federal Film and TV Tax Credit

Members of the U.S. House of Representatives are drafting a bill that would create a federal tax credit of 20 percent on labor costs for film, television, animation, and reality-program production. The credit could rise to 30 percent if producers meet up to two of four “uplift” criteria—filming in a rural opportunity zone, producing an independent work, repatriating at least $10 million of overseas filming, or spending a minimum of $10 million in ten different states. The proposal is being shaped by a bipartisan group that includes Rep. Nathaniel Moran (R-TX), Rep. Linda Sanchez (D-CA), Rep. Laura Friedman (D-CA), and Rep. Brian Jack (R-GA). All serve on the Ways and Means Committee, which oversees tax legislation.

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The credit applies to both above-the-line and below-the-line labor expenses but excludes news and sports broadcasts. Producers may claim the credit against federal income tax or sell it to other taxpayers; it is non-refundable. Because the federal credit would stack with existing state incentives, total subsidies could exceed 60 percent in favorable jurisdictions. The Joint Committee on Taxation has not yet scored the bill, but analysts expect the cost to run into the billions of dollars.

Variety Magazine

Rep. Laura Friedman said the initiative gained new momentum after the President’s endorsement and expressed optimism about advancing the measure during the lame-duck session following the November election, though she cautioned that success was not guaranteed. State lawmakers in California have advocated for additional bonuses for productions in federally declared disaster zones, but that provision does not appear in the current draft.

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• “I would be very happy for it to happen in the lame duck,” — Rep. Laura Friedman

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• “I can’t promise that’s possible. We’re going to try not only to get this done quickly, but to have all our ducks in a row.” — Rep. Laura Friedman

Variety Magazine

Sources indicate the bill could be introduced as early as the end of next week and will later be reviewed by the Joint Committee on Taxation. Lawmakers hope to attach the credit to a broader tax package in the lame-duck session, with the possibility of further deliberation in the next Congress if the deadline is missed.

Variety Magazine