Trump backs a federal film tax credit. What that could mean for Hollywood

As seen in the Los Angeles Times.

For years, Hollywood has talked about a federal film and television tax credit that could help the industry combat the growing number of productions fleeing overseas.

This week, the entertainment business got a glimmer of hope.

After more than a year of quiet work from California lawmakers, industry lobbyists and Hollywood unions to build a bipartisan coalition, President Trump endorsed the effort in a post on Truth Social, providing a major boost to the issue.

If passed, a federal incentive is expected to help draw some productions back to the Golden State, industry experts and advocates said. While it probably won’t immediately end Southern California’s production crisis — as many states now have established film hubs stocked with experienced crews and more generous tax breaks — an added federal credit could certainly help make California more competitive, they said.

“I will put our crews and our talent against any talent anywhere in the world,” said Rep. Laura Friedman (D-Glendale), a former producer who has been pushing for a national film tax credit. “If we have a level playing field upon which to shoot, where we are not much more expensive than other locations, productions will come back to Los Angeles.”

Trump’s Truth Social post came after a meeting with actor Jon Voight, one of the president’s designated Hollywood ambassadors who has played a key role in lobbying for the film industry and advocating for a federal tax credit. Though Trump has had frosty relations with Hollywood, particularly since many heavyweights did not support his presidential campaign, the industry’s jobs push aligns with his focus on re-shoring work, marking a rare moment of agreement.

Speaking to reporters in the Oval Office, Trump said Wednesday that he has done “a lot of work” in the last week to get something done on federal tax incentives for the film and television industry.

Trump said he has spoken to streaming giant Netflix; Ari Emanuel, chief executive of TKO Group Holdings Inc.; and “many others,” and that he is hopeful there will be a bipartisan push to revive productions in Hollywood with “big subsidies and big credits.”

“We don’t give anything and we should,” Trump said, referring to proposed tax breaks for U.S. productions. He added that he wants legislation to “match” what other countries are offering.

Now, lawmakers must hammer out the details of that legislation.

The bill will have a Republican sponsor from a state known for film and TV production, but Friedman declined to name the person, saying she was waiting for Republicans to make their internal decision about that lead lawmaker.

The bill is likely to go through the House Committee on Ways and Means. While exact provisions are still being negotiated, the expectation is that the credit will be stackable with states’ incentives — similar to how Canada’s tax credit works. A 20% federal tax credit on all labor costs — including for salaries of actors and crew members — is being discussed.

An earlier proposal from Sen. Adam Schiff (D-Calif.) had called for a baseline labor-based tax credit of 15% to 20%, in addition to bonus add-ons for indie productions among others, a Schiff spokesperson said.

Schiff has previously noted that 45% of all U.S. films and scripted TV shows were shot internationally last year, up from about 33% in 2022.

Having Schiff and Trump on the same side of this national tax credit is emblematic of the odd bedfellows the effort has gathered.

The Motion Picture Assn. studio lobbying group has released a statement backing the proposal, as have unions such as the Screen Actors Guild — American Federation of Television and Radio Artists, the Directors Guild of America and the International Alliance of Theatrical Stage Employees.

“I am in strong agreement with the President,” Schiff wrote Monday in a post on X. “Congress should immediately take up and pass a federal film tax incentive to bring back these good-paying jobs that we’ve lost to other countries.”

Production incentive experts say any national film tax credit will need to have a seamless process, one with minimal red tape.

One idea is to make the national production incentive an overlay that’s attached to states’ incentives, so the federal government doesn’t need a separate agency to vet the same criteria, which could slow the process, said Peter Marshall, managing principal of media insurance services at Epic, an insurance broker and consultant.

Parameters will also need to be clear, and the program easy to access, said Kathleen Thompson, vice president of tax incentives at payroll service Cast & Crew.

“There is an excitement and an energy and a hopefulness right now from the production community,” she said. “I’ve certainly gotten notes from clients, potential clients and industry colleagues that are very excited about the possibility of this passing and becoming a reality.”

Stacking a federal tax credit on top of the newly bolstered California production incentives could help give the state an edge when producers are pricing out location shoots.

“California is still the leader in production,” said Joe Chianese, senior vice president at Entertainment Partners, which tracks production incentives worldwide. “Producers would like to stay home if they can, but it boils down to the math.”

But even with the improvements to California’s film and TV tax credits, the state’s program still has limitations.

California has an annual funding cap of $750 million, has designated application windows and does allow the cost of actors’ salaries — a major driver of movie budgets — to be counted toward the tax breaks.

Beyond the program, the Golden State is just more expensive than other U.S. locales, and some filmmakers have criticized the red tape that makes shooting in L.A. more difficult.

“Can we be more competitive with a federal incentive? Absolutely,” Thompson said. “Can it completely turn the tide? I don’t know, but I hope so for our industry and our state.”

Industry stakeholders say they are hoping for quick movement on the issue, particularly since it will probably take more than a year after any tax credit is passed for producers to start making plans to move filming back to the U.S. due to lengthy production timelines for movies and TV shows.

“There is a ticking clock,” said Marshall of Epic. “If something isn’t done by the end of the year or in sight, there will be a further solidification of offshoring.”

For Peter Max-Muller, owner of The Ruby, a North Hollywood contemporary clothing rental business, the loss of film and TV shoots in L.A. is one of many threats his business faces, in addition to the use of AI production.

His sales typically mirror the production data from the nonprofit FilmLA, which recorded a 13% drop in shoot days in L.A. County in the second quarter over the same period a year ago.

The goal of a federal incentive, Max-Muller said, “is that we get that runaway production back.”

It’s why Friedman said she is pushing to get the tax credit legislation done as soon as possible.

“The film industry is deep in the identity of Los Angeles,” she said. “And it’s worth saving.”