Film Incentives Boost US Economy: A Deep Dive

Unscripted productions in Los Angeles saw 40% fewer shoot days in the second quarter of the year compared to the same period in 2025, as major shows like 'American Idol' and 'The Masked Singer' packed up for states offering lucrative tax credits. This 40% decline reveals state-level incentives are already redrawing the industry's map, directly influencing the federal film and TV production incentive discussions set for 2026. 'American Idol' is moving its production from Los Angeles to the Atlanta area in Georgia for its upcoming Season 25, according to Deadline. Similarly, 'The Masked Singer' moved production to New Jersey, which offers production tax incentives of 30% on qualified expenses with up to 40% on certain studio projects, also reported by Deadline.

Traditional film production centers are losing ground, but a proposed federal tax credit could either stabilize the industry nationwide or intensify the state-level competition for productions.

The proposed federal film tax credit is likely to further decentralize the U.S. entertainment industry, creating new regional production hubs and challenging the long-held dominance of Hollywood.

The Shifting Landscape of Production

New Mexico has seen more than $5.75 billion in production spend, according to nmfilm.
The Delaware Division of Small Business (DSB) is accepting applications for the Delaware Entertainment and Production Tax Credit, the state's first film tax credit program, as reported by State of Delaware News (.gov).
Productions that comply with requirements in New York may be eligible for a tax credit of 30% of qualified production costs, according to esd.

States aggressively vie for film and TV business. Some, like New Mexico, reap billions in production spend. Others, like Delaware, are just launching their first programs. This diverse landscape of state-level incentives, from new programs to established tiered credits, confirms states are not merely competing on percentages. They strategically tailor credits to attract specific productions and achieve local economic goals, fundamentally fragmenting the national industry.

The industry faces a future where production decisions will be increasingly influenced by a complex interplay of federal and state incentives, leading to a more distributed and competitive landscape. The substantial production spend in states like New Mexico, coupled with aggressive incentives from states such as Illinois, confirms that decentralization extends beyond mere cost-cutting. States are actively building robust, long-term production ecosystems. This sustained shift suggests traditional production hubs like Los Angeles may see further decline, as states with emerging film industries and more competitive incentives become winners in this evolving economic development strategy. By Q4 2026, many production companies will likely have finalized their filming locations based on the most advantageous federal and state incentive packages.