The American film industry is in crisis. In 2025, Hollywood has hit unprecedented lows, with the summer box office marking the least attended season since 1981 (adjusted for inflation, excluding pandemic years), dominated by flops despite heavy marketing and star power.
Domestic box office revenue for 2024 dipped to $8.7 billion—a 3% decline from 2023—with early 2025 figures hovering at $6.9 billion, reflecting a 40% drop in U.S. theatrical attendance over the past decade amid rising ticket prices.
Production in Los Angeles has plummeted: On-location shoot days fell more than 30% over five years, with 2024 recording the lowest totals since the COVID-19 disruptions, second only to 2020. Listen to Rob Lowe lament the incentive to film abroad over across the street in Burbank.
This has erased roughly 42,000 jobs in just two years.
LA reporting a 58% decline in permitted shoot days from 2021 to 2024.
Broader factors—lingering effects of the 2023 WGA and SAG-AFTRA strikes, the streaming wars' burst (leading to slashed content budgets), AI disruptions, shrinking per-project funding, and economic uncertainty—have frozen independent filmmakers, reduced wide releases to historic lows (projected at 110 for 2025, down from peaks), and shifted power to a handful of blockbusters.
California now ranks sixth globally for filming, behind Toronto, the U.K., Vancouver, central Europe, and Australia, as 71% of projects denied state tax credits since 2020 have relocated out-of-state.
Without intervention, this contraction risks turning Hollywood's "evolution" into extinction.
The path to revival lies in decentralizing production from Los Angeles' high-cost, wildfire-ravaged epicenter to America's heartland, leveraging aggressive state tax incentives paired with federal tools like Sec. 181. Heartland states are aggressively competing to "steal" Hollywood's thunder, offering 20-40% tax credits, grants, and rebates on qualified in-state spending—often without caps that hamstring coastal programs.
At least 18 states, including heartland hubs like Georgia (30% credits with a 10% logo uplift, no annual cap), Illinois (30% base credit), and Tennessee (reimbursable grants up to 25% of spend), have expanded incentives since 2021, drawing projects like Yellowstone and Twisters to Texas and Oklahoma for their pro-business environments and infrastructure.
These programs don't just lure one-off shoots; they build permanent studios, train local crews, and boost tourism—turning transient productions into economic engines. For instance, Georgia's uncapped model has made Atlanta the "Hollywood of the South," while Illinois' credits have been called the "biggest box office draw" for relocating majors.
By contrast, California's 20-35% credits (capped at $750 million for 2025-26) are outpaced by heartland offers, exacerbating LA's 22% year-over-year production drop in early 2025.
This is the reason I was honored to work with Tennessee Majority Leader Jack Johnson and leadership to increase the Governor’s budget for film incentives to $10 million recurring.
Tennessee exemplifies the heartland's high-return model. The state's Tennessee Entertainment Commission (TEC) has used grants and reimbursements since 2007 to attract 133 incentivized projects, generating $1.2 billion in statewide economic output, $833.9 million in new worker income, and 13,083 jobs (6,164 direct, 6,919 indirect/induced)—while sourcing $287.8 million in goods from 14,400 local vendors.
These efforts yielded $28.8 million in sales tax revenue ($21.6 million state, $7.2 million local), with every $1 in new output spurring $0.82 more—a conservative multiplier that underscores fiscal prudence.
Broader 2024 data shows Tennessee productions contributing $8.2 billion in total economic impact, ranking the state No. 5 nationally for entertainment cluster employment (up 126% since 2014, adding 1,887 net jobs).
In 2025, Texas passed Senate Bill 22, expanding the Texas Moving Image Industry Incentive Program (TMIIIP) with a $1.5 billion investment over 10 years ($300 million biennially, up from $200 million). Championed by actor Matthew McConaughey—who testified alongside Woody Harrelson, appeared in promotional ads like "True to Texas," and even took a 15% salary cut on his Apple TV+ series Brothers to film locally—this program aims to make Texas competitive with states like Georgia and New Mexico by offering cash grants (rebates) on eligible in-state spending (e.g., wages, vendors). Base rebates range from 10-25% based on project type and budget, plus up to 2.5% uplifts for criteria like rural filming or historic sites. McConaughey argued it would build permanent infrastructure, creating jobs in crew, post-production, and related fields, with a projected $4 economic return per $1 invested.
The Texas program includes a 2.5% rebate uplift for projects where at least 5% of the combined cast and crew are Texas-resident veterans (honorably discharged U.S. Armed Forces members). This stacks with the base rebate and other bonuses and aligns with broader federal Work Opportunity Tax Credits (up to $9,600 per veteran hire via Texas Workforce Commission). It prioritizes local veteran employment to boost economic impact.
While exact ROI varies by study (some critics cite lower net returns like 13-28 cents per dollar in older analyses, often overlooking indirect benefits), the TEC's 2025 Creative Economy Impact Report demonstrates a clear positive fiscal loop: Incentives repatriate spending from high-cost California, fostering self-sustaining growth without the subsidies' "leakage" to out-of-state talent.
(Note: An exact 8:1 ROI wasn't detailed in the latest TN report reviewed, but comparable programs like New York's yield ~$9 in activity per $1 in credits, aligning with heartland successes.
Layering federal incentives atop state programs amplifies this revival. Section 181 of the Internal Revenue Code—set to expire for productions starting after 2025—allows immediate expensing of up to $15 million ($20 million in distressed areas) in qualified U.S. production costs (e.g., compensation, property rights) for films, TV, and theater, rather than depreciating over years.
At least 75% of services must be U.S.-based, making it a perfect complement to heartland relocation: Pair it with Tennessee's 25% grants, and producers save on both federal taxes and state spend, slashing costs by 40-50% versus LA. Historically extended eight times, Sec. 181's omission from the 2025 One Big Beautiful Bill Act signals urgency—expedite 2025 starts to claim it, but Congress must renew to sustain momentum.
Without it, heartland gains stall; with it, we democratize filmmaking, creating 1.7 million jobs nationwide (as seen in incentive-heavy states since 2014) and injecting $35 billion in spending.
Decentralizing via these incentives isn't just economic triage—it's reinvention. Heartland states offer diverse locations (Tennessee's Smoky Mountains to Illinois' urban grit), lower logistics costs, and untapped crews, countering Hollywood's fatigue with fresh narratives rooted in America's core.
Extend Sec. 181, supercharge state programs, and watch the industry rebound: More jobs, bigger multipliers, and movies that reflect—and revitalize—the heartland. The series finale for traditional Hollywood could be the pilot for a thriving, nationwide cinema.
Editorial comments expressed in this column are the sole opinion of the writer.
To learn more on incentives for heartland productions and the epic battle against AI hear our panel discussions with industry insiders at the 10th Annual Gideon Film Festival 2025 at the links below.
Panel 1
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Panel 3
