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.
How State Incentives Lure Productions
Illinois producers are offered a credit of 35% of all qualified Illinois spending, including post-production and Illinois resident salaries up to $500,000 per worker, according to dceo. This base incentive is further enhanced by additional, highly specific credits. For instance, an additional 15% credit is available on salaries of individuals making at least $1,000 in total wages who live in economically disadvantaged areas with an unemployment rate at least 150% of the State's annual average. Furthermore, an additional 5% credit is offered on Illinois resident salaries for productions filming outside of Cook, DuPage, Kane, Lake, McHenry, and Will Counties.
Illinois's layered incentives illustrate a strategic push to maximize financial benefits and foster local economic growth. These granular, tiered credits transcend simple cost reduction. They represent a sophisticated, localized economic development strategy, not merely a percentage race. This approach allows states to actively cultivate robust, long-term production ecosystems, directly challenging traditional industry centers.
The Federal Response and Its Implications
The proposed federal credit introduces a new layer of incentives that could either standardize the fragmented state-level competition or create new dynamics for where productions choose to film. This federal intervention arrives as traditional hubs already bleed productions. The 40% drop in LA's unscripted shoot days, with shows like 'American Idol' and 'The Masked Singer' fleeing, confirms the existential threat posed by aggressive state incentives. A federal policy, therefore, must navigate this volatile landscape, risking either stabilization or further fragmentation.
The proliferation of highly targeted state tax credits, such as Illinois's additional 15% for hires in economically disadvantaged areas, shows states weaponize incentives to reshape local economies. This forces a re-evaluation of how federal policy can effectively compete with or complement such granular strategies. A blanket federal credit might fail to address the nuanced, localized competition, potentially intensifying the race for productions rather than creating national equilibrium.
What Comes Next for Film Production
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.
