This bill extends the tax deduction for film and television productions through 2030, increases the deduction caps, and ties future caps to inflation.
Judy Chu
Representative
CA-28
This bill amends the Internal Revenue Code to extend the tax deduction for film and television productions until December 31, 2030. It significantly increases the maximum deductible production cost cap from $\$15$ million to $\$30$ million generally, with higher limits for productions in designated areas. Furthermore, these new dollar amounts will be automatically adjusted for inflation starting in 2027.
Hollywood Tax Break Extended to 2030, Deduction Cap Doubles to $30 Million
This bill is all about giving the film, TV, and theater industries a big, long extension on a specific tax break. Specifically, it amends Section 181 of the Internal Revenue Code, which allows producers to deduct certain costs upfront. The current expiration date of December 31, 2025, is getting pushed back five years to the end of 2030, locking in this incentive for the rest of the decade. But the real headline here is the money: the maximum production cost that qualifies for this deduction is doubling, jumping from $15 million up to $30 million for most projects. This is a massive boost designed to keep big-budget productions filming here.
Bigger Budgets, Bigger Breaks
Think of this deduction cap like a speed limit sign for tax savings. Before this bill, if a production spent $25 million, they could only deduct $15 million under this section. Now, that same production can deduct the full $25 million, up to the new $30 million limit. This change incentivizes producers to invest significantly more in domestic productions, which means more jobs for local crew, actors, and support services—from caterers to lighting technicians. For productions filmed in specific, designated areas (often those with existing local incentives), the caps are even higher, increasing from $30 million to $40 million.
Inflation-Proofing the Industry
One smart feature of this bill is how it handles the future. Starting in 2027, all these new dollar amounts—the $30 million, $20 million, and $40 million caps—will automatically be adjusted for inflation every year. This is a big deal because it means the tax break won't lose its value over time, which is exactly what happens when caps stay fixed while production costs (like wages and equipment rentals) keep climbing. By tying the deduction limits to the cost-of-living adjustment, the bill ensures that the incentive remains meaningful for big-budget projects for the full five-year extension and beyond. The changes apply to any production that starts filming after the date the bill becomes law.
What This Means for the Rest of Us
While this bill is a clear win for Hollywood and the entertainment industry—providing certainty and a major financial incentive to keep production jobs stateside—it’s important to remember how tax deductions work. This is a cost to the federal government. When a production claims a larger deduction, they pay less in taxes, which means less revenue flowing into the Treasury. For the average person, this is essentially a subsidy for the film industry, paid for by the general tax base. The hope is that the increased economic activity and job creation generated by these bigger, incentivized productions will outweigh the cost of the tax break, but that's the trade-off inherent in any tax expenditure like this.