Even as the U.S. entertainment industry has faced a staggering production slowdown, the global competition to host Hollywood projects has not slowed at all. If anything, it has intensified.
Indeed, the production incentive landscape now resembles nothing so much as an arms race, as explored in the new Luminate Intelligence special report Hollywood Exodus 2026.
With Wisconsin rejoining the fold as of Jan. 1, 2026, 38 U.S. states, plus Washington, D.C., now administer some form of incentive. The vast majority are tax credits, or reductions in what productions owe in state taxes, but a handful of states instead offer rebates (refunds of taxes paid).
The bulk of these programs are capped annually, restricting the total dollar value of credits that can be claimed each year. New York boasts the country’s largest incentive budget, at $800M per year, with California now just behind at $750M. (One wonders if CA’s increased budget was purposely designed to surpass NY’s previous $700M figure.)
The Golden State is not alone in throwing money at fleeing producers, however. Texas massively expanded funding for incentives starting in 2024 and raised its biannual allowance from $200M to $300M just a year later (taking the unusual move of spreading its total budget over two-year periods).
Meanwhile, Southwest rival New Mexico passed legislation in 2023 steadily raising its tax credit cap from $110M to $160M over the next five years.
Often, the amount an individual project can claim in credits or rebates is capped as well, but several increasingly popular states, including New Jersey and Illinois, do not have such restrictions, which is naturally highly appealing to producers.
In the current market, however, simply offering uncapped credits does not guarantee success, as evinced by the struggling industry in Georgia, where production spending has sunk dramatically since 2022. But annual and per-project caps are not the only weapons being deployed by states.
New Mexico also allows state “film partners” — companies that purchase or sign a 10-year lease for a qualified production facility — to draw from an uncapped tax credit fund. New Jersey has taken a similar approach, giving expanded credits to companies that maintain long-range facilities there. Creative incentives like these may offer states’ best hopes for not just attracting but keeping long-term, high-budget production activity.
These programs remain controversial policies; independent, peer-reviewed analyses have consistently found that production incentives’ economic rewards do not outweigh their costs to state governments and constituents. Competition for Hollywood dollars may be driven by outdated perceptions of their benefits; nevertheless, there’s no sign of an imminent de-escalation in the arms race.
