What qualifies for the federal film and TV tax credit

A qualified production must be a feature film, a television pilot, or a television season. It must be produced in the ordinary course of a trade or business, for commercial purposes, and be chargeable to capital account. It must be completed during the taxable year.

These requirements exist to keep the credit tied to genuine commercial production rather than personal projects, hobby films, or internal corporate work. A film made for its own sake, with no commercial distribution path, would not clear the ordinary-course and commercial-purpose tests as introduced.

A qualified production must cost more than $1,000,000 in total. The threshold is total cost, not qualified compensation, so it is measured before any domestic-compensation calculation.

The practical effect is that the credit is aimed at productions of real scale. Combined with the social-platform exclusion below, the threshold means vertical series and microdramas generally do not qualify, even though they are a growing share of short-form video.

A qualified production must have 75% of its principal photography days occur within the United States. The test is measured in days, not dollars, and it applies to principal photography specifically.

This is the test that most overseas-shot productions fail — and the reason the bill creates separate tracks for visual effects and post-production, which can qualify without meeting it. See the VFX and post-production tracks for how those work.

A television season means at least 4 episodes with narrative or thematically related common elements, produced for distribution within 12 months of the close of the taxable year in which it is completed. All episodes of a season are treated as a single production.

Treating a season as one production matters for the budget threshold and the 75% test: the $1 million floor and the domestic-photography ratio are measured across the whole season, not episode by episode. A streaming season of eight episodes is one qualified production, not eight.

For animated productions, the location where animation activities are performed is treated as the location of principal photography. The percentage is based on the ratio of domestic animation cost to total animation cost, rather than photography days.

Animation activities mean keyframe animation, in-between animation, animation photography, and voice recording. A production that does the bulk of that work in the United States can meet the 75% test even though no live-action photography occurred.

Qualified compensation means compensation paid or incurred, directly or indirectly, for qualified services performed in the United States, including work by employees, contractors, and subcontractors, and chargeable to capital account.

Qualified services means services performed by actors, production personnel, directors, and producers — including pre-production and post-production work. Production personnel is defined broadly: writers, choreographers, composers, casting agents, camera operators, set designers, lighting and sound technicians, make-up artists, editors, and visual-effects service providers.

Participations and residuals are excluded. The credit is a labor credit on domestic wages, not a credit on profit participations or backend paid to talent long after the production wraps.

The following are not eligible for the federal film and TV tax credit as introduced:

The social-platform exclusion plus the $1 million threshold means vertical series and microdramas generally do not qualify. The exclusion is written broadly — “intended primarily for social media platforms, media sharing, or blogposts” — so a project built for a short-video app is out even if its budget would otherwise clear the floor.

Once a production qualifies, the five uplifts can raise the rate to 30% →