Hollywood’s Film Production Faces Steep Decline Amid Tax Credit Competition

LOS ANGELES, California — Hollywood is grappling with a significant decline in film and television productions, raising concerns about its future as the global center of moviemaking. Adam Scott, known for his role in the hit TV show Parks and Recreation, noted that the studio where the show was filmed is now eerily quiet, a stark contrast to its bustling past.

“Nothing shoots here,” Scott told his former co-star Rob Lowe. The two stars are examples of the trend, as Scott’s recent project, Severance, was filmed primarily in New York and New Jersey, while Lowe is set to film in Ireland.

The rising costs associated with filming in California are a key factor. Lowe pointed out that “it’s cheaper to bring 100 American people to Ireland than to walk across the lot at Fox.”

California has long faced competition from other states and countries offering substantial tax incentives. For instance, New York, Georgia, and New Mexico have become popular alternatives for film studios. Internationally, the UK has seen substantial growth in the film and TV sector, capturing projects that would have previously been filmed in Hollywood.

More alarming is the reduction in productions in Los Angeles. According to Film LA, only a fraction of productions were filmed locally in 2024, echoing numbers from the pandemic year of 2020. The ongoing challenges for Hollywood coincide with broader economic uncertainties as studios recalibrate in the face of the streaming wars.

“I think it was maybe some arrogance, and maybe some lack of foresight,” said Rebecca Rhine, the western director of the Directors Guild of America. A push is underway among Hollywood workers to raise California’s tax credits for film production from 20% to as high as 35% to improve competitiveness.

In response to the pressing need, California Governor Gavin Newsom has increased the film and television tax credit program from $330 million to $750 million. But industry professionals, such as IATSE local 728’s vice president Malakhi Simmons, emphasize the dire need for jobs, highlightingloss of approximately 18,000 jobs in the last three years.

Notably, among these issues was former President Donald Trump’s suggestion to impose tariffs on films produced outside the U.S. Though it stirred controversy, there remains a strong push from A-list stars and union workers to retain more productions within Los Angeles.

“There are so many people I know who do everything they can to shoot here,” said Susan Sprung, CEO of the Producers Guild.

However, amid a $1 billion budget shortfall in Los Angeles and $12 billion in state deficits, funding increased tax credits is contentious. Writer-director Alexandra Pechman helped initiate a petition for expanding tax credits, stating, “there’s incentives to be filming pretty much anywhere other than LA.”

As cost increases and permitting difficulties plague the film industry in L.A., Pechman and others advocate for necessary changes to help attract filmmakers back to Hollywood. Simplified permitting and the resolution of logistical hurdles, among other reforms, are being discussed.

FilmLA, coordinating permits across regions, emphasizes their fees align with regional standards. Meanwhile, Los Angeles Mayor Karen Bass is looking to streamline processes to benefit film production.

Amid rising concerns about job losses and creative workforce migration, union leaders assert that paying fair wages is not the problem, stating external tax incentives and market trends are the leading issues driving productions away.

As the film industry evolves globally, many worry that without intervention, Hollywood risks losing its status as the heart of film production. The renewed call for tax credits reflects a desperate attempt to halt the decline and recover lost opportunities. “It’s an emergency,” Pechman said, highlighting a looming crisis in California’s entertainment landscape.