Congress has introduced a bipartisan, bicameral bill in September 2026 that would create a new federal tax credit for domestic film and television production. The Motion Picture, Television, and Entertainment Revitalization Act (MPTERA) proposes a 20% base credit on qualified compensation for eligible productions, with bonus tiers that could bring the total credit to 30%. The bill has not yet become law, and its legislative path remains uncertain, but its structure raises planning questions worth addressing well before enactment.
How the proposed federal film tax credit would work
MPTERA would create a 20% federal tax credit on “qualified compensation” for eligible productions, with bonus tiers that can raise the total to 30%.
To qualify, a production must be a feature film, television pilot, or television season produced for commercial purposes, with a total cost exceeding $1 million and at least 75% of principal photography days occurring in the US. Qualified compensation covers pay for labor-based services across pre-production and post-production, but excludes participations and residuals.
Excluded entirely from eligibility are news programming, live sports, talk, game, interview, and award shows, daytime dramas, gala event programming, radio productions, social media content, advertising, and corporate videos.
Four bonus categories, each worth an additional 5%, can bring the total credit to 30%:
- Productions in rural qualified opportunity zones or federally declared disaster areas;
- Independent productions, defined by statute as productions by taxpayers not publicly traded and not majority-owned by a publicly traded company;
- Qualifying multi-state producers; and
- Taxpayers who increase their number of domestic productions relative to a historical foreign production baseline.
The multi-state bonus carries specific state-by-state thresholds rather than an aggregate standard, and the domestic increase bonus is calculated against a rolling baseline that becomes more demanding over time.
Traditional Post-Production (TPP) and Visual Effects (VFX) work qualify as separate credit pathways, not simply add-ons. A production that does not meet the 75% US photography threshold can still access the credit if at least 75% of its post-production or VFX costs are incurred domestically, and productions qualifying under both pathways can combine their qualified compensation amounts. Animated productions are measured by the proportion of animation costs incurred in the US rather than by shooting days.
The credit is transferable and reduces the production’s tax basis by the credit amount. Productions must commence principal photography in taxable years beginning after December 31, 2026.
Why this bill matters for producers
The US does not currently offer a dedicated federal tax credit for film and television production. State programs have partially filled that gap, though with significant variation in scope, benefit levels, and eligibility. California’s Film & Television Tax Credit Program 4.0, one of the most substantial state-level incentives in the country, reflects ongoing efforts to keep production competitive domestically. A federal credit layered on top of existing state programs like California’s would shift production economics—particularly for large-scale or multi-state productions that currently weigh domestic incentives against those offered by Canada, the United Kingdom, Australia, and other filming destinations.
For independent producers, the bonus credit structure could make domestic production more financially viable, especially when a project is already planned for an opportunity zone or a producer has historically relied on foreign locations to manage costs.
What to think about before the bill passes
MPTERA is not yet law, but the decisions that determine credit eligibility are made long before a production wraps. Where to shoot, how to structure the production entity, how to classify compensation, and whether to concentrate post-production and VFX work domestically are all questions that become harder to answer retroactively.
One of the most important steps studios and production companies can take now is to track labor costs by location starting January 1, 2027, the date from which principal photography must commence to qualify. Building that data infrastructure in advance means the information will be available and auditable if and when the credit takes effect.
A few issues are worth raising now.
The 75% domestic photography threshold is a gating requirement, so productions that regularly combine domestic and international locations should track and document day counts with that bar in mind.
The independent producer bonus is tied to a statutory definition based on public market status and ownership structure, meaning producers affiliated with larger corporate entities should assess eligibility early.
The multi-state bonus requires meeting independent thresholds in each qualifying state rather than an aggregate, so the recordkeeping burden is real. For productions with significant effects work, existing vendor relationships and workflows should be reviewed against the 75% US-cost threshold before contracts are signed.
The credit transfer mechanism is also worth flagging early, since it requires coordination between legal and tax counsel and is far simpler to structure in advance than to retrofit after closing.
Because MPTERA touches tax, production finance, physical production, legal, payroll, and government affairs, coordinating across those functions will be essential to claiming the credit effectively. Studios should consider appointing a cross-functional working group with a designated lead in each area, responsible for the tracking, documentation, and compliance tasks described above, reporting to finance leadership.
How Nixon Peabody can help
Nixon Peabody’s Entertainment & Sports practice provides legal and strategic counsel to entertainment industry clients navigating evolving policies like MPTERA. This includes helping clients navigate considerations involved in claiming the credit—from initial cost tracking and entity structuring to credit transfer mechanics—as well as counselling on compliance and reporting obligations. Reach out to your Nixon Peabody attorney to discuss.