Film and television producers could claim credits for qualifying U.S. work

Production companies could claim a tax credit based on qualifying pay for eligible film or television productions. Eligible productions include feature films, television pilots, and seasons of at least four related episodes that meet the cost and U.S. filming tests. The production must be a commercial feature film, television pilot, or season, cost more than $1 million, and have at least 75 percent of its principal photography days in the United States. Qualifying pay covers U.S. services by actors and production workers, including contractors, but excludes participations and residuals. News, live sports, advertising, and social media productions are among those excluded. The credit rate is 20 percent and may rise under listed tests, but cannot exceed 30 percent. The proposal applies to productions whose principal photography begins in taxable years starting after December 31, 2026.

The credit rate could increase for certain filming locations, producers, and production growth. These possible increases apply only to productions and producers that meet the stated tests. An increase of 5 percentage points may apply for qualifying filming in a rural opportunity zone or disaster area, for independent producers, or for producers meeting multi-state or domestic production growth tests. The combined rate cannot exceed 30 percent. The domestic production growth test compares production counts with earlier years and uses rising percentage thresholds. The domestic production growth test starts with the first taxable year beginning after December 31, 2026; other increases apply to qualifying productions completed in the relevant taxable year.

Certain visual effects and traditional post-production work could qualify for the credit even if a production misses the usual U.S. filming test. Traditional post-production includes finishing work such as editing, sound work, scoring, and dubbing; it excludes visual effects and promotion. The production must meet the other listed eligibility rules and must not be an excluded type of production. At least 75 percent of the visual effects or traditional post-production cost must be incurred in the United States; only related U.S. service pay counts. These projects generally use the 20 percent rate. A 5-point increase may apply in limited cases, including certain location or independent producer tests; the independent producer cross-reference appears inconsistent. The proposal applies based on when the production’s principal photography begins: taxable years starting after December 31, 2026.