The Film Incentive Arms Race

California has been the global epicenter of entertainment since the 1920’s, when the Hollywood studio system was born, but over the last 30 years, the rise of film tax incentives has sounded the alarm for leaders in Los Angeles.

In the mid-1990s, approximately 80% of U.S. movies were filmed in the Golden State, which also accounted for 45% of the industry’s employment. (Motion Picture Production in CA, Fred Blog) Then came the era of the “runaway productions”; Hollywood films shot at least partially outside of L.A. By 1998, Canada was the destination for about 90% of these productions, according to a study by the Director’s Guild of America and the Screen Actor’s Guild, which reported a total economic hit of $10.3 billion. That same year, the percentage of films shot in California dropped to 55%.

What accounted for this seismic shift? From 1998 to 2002, the exchange rate of the US dollar to the Canadian dollar peaked at $1 USD = $1.57 CAD, meaning $10 million American dollars could yield up to $5.7 million in additional “free” Canadian dollars. Add to that a significantly lower cost of living and a 16% federal labor-based rebate on filming with Canadian crews, and it’s easy to see why studio heads decided to move productions north.

Not to be outdone, in 2002, Louisiana made history by enacting the Louisiana Motion Picture Tax Incentive Act, which was the first major film tax credit program launched in the U.S. The state became known as “Hollywood South” with high profile productions including “Ray” (2004), “The Curious Case of Benjamin Button” (2008) and “The Final Destination” (2009).

Other states including New Mexico (2002), Georgia (2005), Massachusetts (2005), North Carolina (2006) and Connecticut (2006) soon followed Louisiana’s model, adopting some or all of these key features:

• Incentives: transferable or refundable tax credits and rebates

• A local crew base that can handle big productions

• Sustainable infrastructure in the form of large production spaces

Georgia has arguably been the most successful state at attracting film productions, thanks to its highly competitive tax incentives—20% base credit and an additional 10% simply for including the Georgia logo in the end credits— (which Marvel fans will likely recall seeing on a number of films). This, combined with the development of multiple soundstages and studios (including Tyler Perry Studios, Trilith Studios, Lionsgate, and others) and an uncapped tax credit—unmatched in the U.S.—making it an ideal hub for blockbuster filmmaking.

Dan Cathy, founder of Chick-fil-A and co-owner of Pinewood Atlanta Studios (now Trilith), stated in 2017, that his facility was currently housing “the largest film production ever, with a $1 billion budget”, which almost certainly was Avengers: Infinity War and Endgame (shot back to back). That production alone would have consumed most, if not all, of the yearly film tax credit budget for any other state.

Let’s look at some recent headlines:

“Soundstage Expansion Adds to New Jersey’s Strong Incentives to Juice Film and TV Production: ‘People Are Taking Notice of Us’” (Variety, May 17, 2025)

“Jordan Boosts Film, TV Production Cash Rebate to Up to 45 Percent” (Hollywood Reporter, May 13, 2025)

“New York Increases Film and TV Tax Credits to $800 Million to Compete for Hollywood Projects” (Hollywood Reporter, May 9, 2025)

“Gavin Newsom Urges Trump To Back $7.5 Billion Hollywood Tax Credit” (Forbes, May 6, 2025)

“UK taxpayers have been contributing millions helping Hollywood make its biggest blockbusters” (Gamereactor, April 22, 2025)

“St. Louis rises as major filming location with motion media tax credit” (KTVI, April 22, 2025)

“Texas Senate approves $500 million infusion for film incentives” (AP News, April 17, 2025)

Matt Belloni’s “The Town” podcast did a show last year on production incentives titled “The Arms Race Behind Where Movies Shoot” and I highly recommend a listen. His guest was Joe Chianese, SVP of Incentives at Entertainment Partners, experts in production tax incentives. Some highlights:

• Often location is one of the first things to be nailed down, along with budget, director, cast, when a film is greenlit.

• There can be up to 15 different budgets for a film, depending on where it is shot, and what incentives are offered.

• Incentives can range from 5% to over 60% of their production “spend”.

• Some regions require the hiring of a local crew such as Canada, whereas some like the U.K., home of what seems to be the biggest Hollywood productions lately (i.e. Jurassic World: Rebirth, The Batman, Mission Impossible: Dead Reckoning/Final Reckoning and many more) do not.

• California is the one major “production hub” that currently does not allow the Above the Line talent spend (Directors, Producers, Actors) to be included in the incentive package, which does not benefit the actors, which is a common misconception.

• Some states allow transferable credits, which are often sold to third parties.

• Post production and VFX can qualify for incentives.

• Power rankings of regions by incentives: UK, Canada, Georgia, California, New Mexico, New York and Illinois.

• The Film and TV industry makes up over 3 million jobs in the U.S. and they are at stake.

Below is a chart comparing some of the primarily regions that offer film incentives:

Below is a clickable map from EP.com detailing all of the incentives each state and country have to offer:

Joe Kim is a former IT pro & film festival founder/director, pursuing opportunities in the film and TV industry.