The "HITS Act" allows independent music creators to immediately deduct up to $150,000 in sound recording production costs, incentivizing investment and growth in the U.S. music industry. It also classifies qualified sound recording productions as qualified property for bonus depreciation purposes.
Ron Estes
Representative
KS-4
The "Help Independent Tracks Succeed Act" or the "HITS Act" allows taxpayers to elect to treat qualified sound recording production costs as expenses rather than capital expenditures, up to $150,000 per production or in the aggregate for all productions in a taxable year. It also classifies these productions as qualified property for bonus depreciation purposes and defines a qualified sound recording production as one produced and recorded in the United States. This applies to productions starting in taxable years ending after the enactment of this Act.
HITS Act Lets Indie Artists Deduct Studio Costs, Up to $150K
The Help Independent Tracks Succeed (HITS) Act is changing the game for independent musicians and producers by tweaking Section 181(a)(1) of the Internal Revenue Code. Basically, it lets artists and studios treat recording costs as immediate expenses for tax purposes—up to $150,000. Before this, those costs often had to be spread out over time, which was a headache for smaller operations.
Cash Flow Boost
This bill is all about making it easier for indie artists to manage their finances. Instead of waiting years to see tax benefits from recording an album, they can deduct those costs right away. Think of a local band spending $50,000 on studio time, equipment rental, and session musicians. Under the HITS Act, they can deduct that full amount in the year they spent it, potentially lowering their tax bill significantly. This is a big deal for artists operating on tight budgets, where every dollar counts.
Made in the USA
There's a catch, though—it has to be American-made music. The bill specifically defines a "qualified sound recording production" as one that's both produced and recorded in the United States (Section 2). So, if you're an American artist recording overseas, those costs won't qualify. This is designed to boost the domestic music industry, encouraging artists to keep their production work—and the jobs that come with it—within the U.S.
Keeping it Real
Now, while this is great news for many, there are a couple of things to keep in mind. The $150,000 limit per production means bigger artists with bigger budgets won’t get the same proportional benefit. A major label dropping $500,000 on a record can still only deduct $150,000. The HITS act also states that once you use this deduction, you can't use other deductions for the same costs (Section 2). Also, because it's categorized as "qualified property," it gets treated as "placed in service"—meaning eligible for tax benefits—when it's first released or broadcast (Section 2). That's a clear timeline, but it also means you have to actually release the music to get the deduction.
Bottom Line
This bill could be a game-changer for independent artists and smaller studios. It’s about more than just tax breaks; it’s about recognizing the financial realities of creating music today. By allowing immediate deductions for production costs, the HITS Act could free up cash flow, encourage more domestic recording, and maybe even help the next big artist get their start.