HR4840-119

What This Bill Does

The CREATE Act expands the tax deduction for qualified film, television, and theatrical productions under Internal Revenue Code section 181. It doubles the ordinary deductible production-cost cap from $15 million to $30 million and changes the special higher cap rule so $40 million substitutes for $30 million. For taxable years beginning after 2026, the relevant dollar amounts are indexed by the section 1(f)(3) cost-of-living adjustment using 2025 as the base year and rounded to the nearest $1,000. The bill also extends the section 181 expiration date from December 31, 2025, to December 31, 2030. The amendments apply to productions commencing in taxable years ending after December 31, 2025.

Who Benefits and How

Screen production companies benefit from a higher $30 million section 181 deduction cap and a later 2030 sunset. Live theatrical producers benefit because qualified theatrical productions remain covered by the expanded deduction. Production workers benefit indirectly if higher and indexed deduction caps support more domestic projects. State film offices benefit if the larger federal deduction helps attract productions to local crews and vendors.

Who Bears the Burden and How

Federal taxpayers bear the revenue cost of larger and longer production deductions. IRS administrators must update guidance and systems for higher caps, indexing, rounding, and effective dates. Treasury tax policy staff must administer the interaction with Public Law 119-21 amendments to section 181. Nonqualifying entertainment projects do not receive the same tax benefit.

Key Provisions

• Increases the ordinary section 181 production deduction cap to $30 million.
• Increases the special higher cap rule to $40 million.
• Provides inflation indexing after 2026 with rounding to the nearest $1,000.
• Extends the section 181 sunset to December 31, 2030.