HR-10582-119
Referred to the House Committee on Ways and Means.
Sponsored by Nathaniel Moran (R-TX)
What it does
This bill would create a new federal business tax credit, section 45BB, equal to 20 percent (up to 30 percent) of compensation paid for services performed in the United States on a qualified feature film, TV pilot, or TV season. A production must cost over $1 million, be completed in the tax year, and have at least 75 percent of its principal photography days in the U.S. The rate would rise by 5 points each for rural opportunity-zone or disaster-area filming, independent producers, producers active in 10 or more states, and producers who increase domestic output against foreign output. Visual effects and post-production work on productions that do not meet the 75 percent test could qualify in limited form. News, talk, game, live sports, social media, advertising, and adult productions are excluded, as are residuals and participations. Credits could be transferred to others and would apply to productions whose principal photography begins in tax years after December 31, 2026.
Who benefits
Film and TV production companies that shoot in the U.S., especially independent producers and those filming in rural opportunity zones or disaster areas. Actors, directors, writers, crew, and other workers whose jobs may be kept or added in the U.S. Visual effects and post-production studios. Local businesses and communities near shoots, including rural and disaster-affected areas. Buyers of transferred credits, who could acquire them at a discount.
Who is hurt
Federal taxpayers, since the credit would reduce Treasury revenue by an amount not stated in the bill. Producers shooting mostly abroad, who would not qualify. Excluded categories such as news, live sports, talk, and social media producers, who get no credit. Foreign film industries that may lose productions. States with their own incentives that may face competition or overlapping subsidies. The IRS, which would bear added administrative and compliance work.
Supporters argue
Supporters argue that U.S. production has been moving overseas to countries and Canadian provinces with generous incentives, costing American crew members and vendors work. They contend a uniform federal credit tied to wages paid for U.S. services would support entertainment jobs across many states, with bonus rates aimed at independent producers, rural zones, and disaster recovery, and that the clawback of basis and the domestic-increase test target the benefit to real growth in domestic output.
Opponents argue
Opponents argue that a credit worth 20 to 30 percent of wages would cost the Treasury an amount the bill does not estimate, and that industry-specific subsidies pick winners rather than treating all businesses alike. They contend that studies of state film incentives often find low returns per dollar, that the transferable credit and multiple bonus tiers add complexity and room for gaming, and that large productions might have filmed in the U.S. anyway.
Constitutional context
Congress's power to tax and spend under Article I, Section 8, Clause 1 supports targeted tax credits, and courts have generally treated such preferences as within that power. The Origination Clause (Art. I, Sec. 7) is satisfied if the House originates the bill, as H.R. 10582 did. No specific landmark case restricts a credit like this one.
Checks and balances
Congress would create the credit and the Treasury and IRS would gain rulemaking and guidance authority over eligibility and reporting, with checks from congressional oversight, judicial review of regulations, and the President's signature or veto.
Historical precedent
Congress has previously enacted a film and TV production deduction (Section 181, and the Section 199 domestic production deduction), and many states offer production tax credits, but no prior federal credit of this kind exists.