Best Picture Nominees Filmed With Tax Credits Far From Hollywood

When the envelope for Best Picture is opened at the Oscars on Sunday night, the winning film will almost certainly be one that received lucrative tax credits to be made somewhere far from the soundstages and backlots of Los Angeles.

“A Complete Unknown,” a Bob Dylan biopic that shot almost entirely in New Jersey, won $28.7 million in tax credits from the Garden State, according to the New Jersey Economic Development Authority. “Nickel Boys” got a $5.4 million incentive from Louisiana to shoot in New Orleans. “The Substance"—set in Hollywood—got a French tax rebate. And none of the other seven nominees for Best Picture were shot in California either.

But the increasingly competitive landscape of film tax credits has spurred criticism among many state lawmakers and government watchdog groups, which warn the arms race is throwing needed tax revenue down the drain.

According to the film industry, such packages are necessary to subsidize the high demand for fresh, well-produced content in the streaming era, and a few states—including California—are actively pushing to make their benefits more attractive.

Producers “will tell you incentives are by and large the driving factor in where productions are choosing to locate,” said Kathy Bañuelos, senior vice president of state government affairs at the Motion Picture Association, a trade group representing major US film studios and streaming services. “As a general rule of thumb, you do look at your creative needs, and look at financially where that creative can be executed.”

US states and countries around the world have set aside billions to create tax incentives aimed at attracting productions that can hire local workers and deliver economic benefits to businesses near studios and filming locations—including incentives specifically tailored toward independent features, big-budget blockbusters, or effects-heavy films.

Boosting Tax Breaks

Several Best Picture nominees shot in states and countries that have increased their tax breaks in recent years, with producers particularly drawn to programs with no incentive cap or looming expiration dates, Bañuelos said.

“They look at where can we have certainty these state programs will remain in place,” she said.

Film and high-end television productions that spend at least 10% of their budgets in the UK can receive 25.5% net credit, at no more than 80% of the core expenditure used in the UK—a benefit to Universal Pictures’ adaptation of the Broadway hit “Wicked,” which filmed at studios outside London.

Adrian Wootton, chief executive of the British Film Commission, said the tax incentive programs have no sunset date, giving studios confidence they can invest in infrastructure and crew.

“That stability is critical and I think that has made a big difference to why we have been able to attract that level of private investment,” Wootton said in an interview.

Elsewhere in Europe, Hungary’s 30% tax rebate attracted the likes of both the independently financed “The Brutalist” and the Warner Bros. sci-fi epic “Dune: Part Two.”

New Jersey’s roughly $100 million annual film tax credit program—which offers a 35% tax credit on qualified film production expenses—has no per-project incentive limit. It also isn’t set to expire until 2039, giving TV and film producers confidence the tax credit will be available the length of shooting, said Tim Sullivan, chief executive officer of the New Jersey Economic Development Authority.

Bañuelos added other incentive programs can be better-suited for specific kinds of movies, with many filmmakers looking abroad for tax credits that cater to movies with visual effects. A line producer for “The Substance,” which relies heavily on gory prosthetics, told the French National Centre of Cinema the movie benefited from the country’s Tax Rebate for International Productions, which offers an up to 30% rebate on a film’s pre-tax expenses—but up to 40% if a production’s qualified visual effects expenses exceed €2 million ($2.1 million).

With competition fierce, some state governors are hoping to increase the size of their tax incentive packages this year.

New York Gov. Kathy Hochul (D) wants to remove limits on how much its credit can offset wage costs, which is currently capped at $500,000 for above-the-line talent like directors and actors. Her budget plan would remove the per-person limit, but keep an overarching cap of 40% on all other eligible production costs. The state has one of the largest film tax credit programs in the US, offering $700 million annually. Best Picture nominee “Anora” filmed throughout Brooklyn, though the $6 million indie drama’s producers haven’t submitted a final application for the tax break, according to Empire State Development.

California Gov. Gavin Newsom (D) has proposed doubling the amount of film and tax credits available every year, to $750 million from $330 million.

Revenue Concerns

Despite the fierce and global competition for show-business activity, some states have pushed to scale back their incentive packages to preserve tax revenue.

In Louisiana, the House of Representatives voted last year to eliminate the state’s $150 million tax incentive for film and television production, drawing the ire of rapper and aspiring studio mogul 50 Cent. Lawmakers ultimately decided to keep the program, but trimmed the annual cap by $25 million as part of a tax overhaul.

Connecticut Gov. Ned Lamont (D) has similarly called to trim the state’s top film tax credit rate, from 30% to 25%, as part of the fiscal 2026-27 budget plan.

Kristan Wong Karinen, a research analyst for Good Jobs First, a critic of tax breaks, said film incentives “don’t provide the returns to residents that production companies like to say they do.” She pointed to independent research in states like New York—which found the program returned 15 cents in direct tax revenue and 31 cents for all combined state tax revenue for every $1 invested. (Empire State Development has said it disagrees with the study’s methodology.)

“It’s a losing game for everyone involved except these major production companies,” she said.