The Great Hollywood Migration: Tax Incentives and Infrastructure Fuel a New Era of Production Rivalry

The geography of American film and television production is undergoing a seismic shift. As the industry emerges from the volatility of recent years, the battle for dominance between the traditional stronghold of California and the surging hubs of the East Coast has intensified. According to the Q2 2026 industry snapshot from the production tracker ProdPro, the competition for on-location shoots has reached a fever pitch, with states leveraging expanded tax incentives and massive infrastructure investments to lure high-budget projects away from traditional hotspots.

Main Facts: A Reshuffled Map of Production

The latest data paints a complex picture of a volatile market. California, long the undisputed king of Hollywood production, has managed to cling to the No. 1 spot, reporting $1.33 billion in production spending for the second quarter of 2026. This figure represents a 5 percent year-over-year increase, bucking the downward trend observed in the first quarter.

However, the narrative is no longer one of California’s total hegemony. New York and New Jersey have aggressively clawed back market share. New York, in particular, has seen a 57 percent surge in total production spending—reaching $1.06 billion—fueled by a series of legislative efforts to make the Empire State a more hospitable environment for major studio shoots.

Meanwhile, traditional production hubs like Georgia are facing a stark reality check. Once the go-to destination for major studio tentpoles—most notably Marvel’s slate of blockbusters—Georgia has seen a 43 percent decline in production spend, signaling a potential exodus of high-profile projects to either more lucrative tax markets or overseas locations like the U.K.

Chronology: The Evolution of the Incentive War

The current state of play is the result of years of "triage" efforts by state governments.

• 2020–2022 (The Pandemic Disruption): The global shutdown forced a pause in location shooting, leading states to reevaluate their competitiveness. During this period, New York began a massive investment in soundstage infrastructure, growing its capacity by 43 percent.
• 2024–2025 (The Legislative Pivot): Recognizing the "production flight," California lawmakers began debating the expansion of its tax credit programs. Simultaneously, New York took the decisive step of removing the cap on "above-the-line" qualified spending, effectively opening the floodgates for large-budget productions that previously found the state too costly.
• Late 2025 (The Shift): New Jersey began cementing its status as a powerhouse by formalizing "studio partner" agreements with industry titans like Netflix, Paramount, and Lionsgate.
• Q1–Q2 2026 (The Current Snapshot): The data shows the early results of these policies. While California’s doubled incentive program has successfully halted a sharp decline, the sheer growth percentage in New York and New Jersey suggests that the "incentive arms race" is effectively shifting the center of gravity for episodic television and mid-to-large-budget features.

Supporting Data: The Dollars and Cents of Production

The data provided by ProdPro offers a granular look at where the money is moving. While total spend is the primary metric, the discrepancy between filming activity and production spend in New Jersey is particularly telling. Despite an 11 percent decline in the total number of projects, New Jersey’s production spend soared by 41 percent to $387 million.

This anomaly is explained by the shift in project types. Episodic television, which typically carries higher per-episode budgets and longer shooting schedules, has replaced lower-budget feature films in the state’s pipeline. A prime example of this trend is the CBS legal drama Cupertino. Despite being set in Silicon Valley, the production is shooting entirely in New Jersey, proving that the combination of tax credits and modern soundstage infrastructure—such as the upcoming developments at the former Fort Monmouth site—can override the need for geographic authenticity.

In contrast, Georgia’s struggles highlight the "risk" factor of relying on a single type of content. The state’s reliance on large-scale superhero and action franchises has become a liability now that those productions have shifted to U.K.-based stages. With a 40 percent drop in filming activity, the state is now in a dead heat with New Jersey for total production dollars, a fall from grace for a state that was, until recently, the primary challenger to California.

Official Responses and Industry Sentiment

The consensus among industry leaders is that tax incentives are no longer just a "bonus"—they are the foundation upon which productions are built. Alex LoVerde, co-founder and CEO at ProdPro, emphasizes that while infrastructure and talent remain crucial, the predictability of a tax program is the ultimate tie-breaker.

"The most competitive incentive programs all have the same characteristics," LoVerde noted in an interview with The Hollywood Reporter. "They offer a meaningful credit, enough funding that producers know they’ll actually get it, credits that are easy to monetize, a fast path to payment, and consistency from year to year. At the end of the day, producers are trying to reduce risk. The easier and more predictable a program is to use, the more competitive it becomes."

From the perspective of state governments, the stakes could not be higher. For outgoing California film office lead Colleen Bell, the Q2 numbers provide a much-needed sigh of relief, offering proof that the expanded incentive program is successfully "bringing more productions back to the state than we saw throughout 2025."

Implications: What This Means for the Future of Film

The implications of this data-driven landscape are profound for the future of the entertainment industry.

1. The Death of Geographic Loyalty

The fact that a show about Cupertino is being filmed in New Jersey illustrates that the industry is becoming increasingly "location-agnostic." As long as a state can provide a soundstage, a skilled crew, and a predictable tax credit, the "story" can be set anywhere. This places a premium on soundstage development, leading to the rapid growth of complexes like Sunset Pier 94 in New York or the 1888 Studios project in Bayonne.

2. The "Risk Mitigation" Era

Producers are no longer chasing the highest percentage point on a tax credit alone; they are chasing stability. States that can guarantee payment and offer "monetizable" credits—meaning credits that can be sold to third parties for immediate cash—are winning. Georgia’s decline serves as a cautionary tale: even a state with a proven track record can lose its luster if the pipeline of projects dries up or if the "incentive" becomes too difficult to navigate.

3. The New Regional Power Centers

We are moving toward a multi-polar production landscape. Instead of one or two states dominating the industry, the U.S. is fracturing into regional clusters:

• The West Coast: Focused on high-end tentpoles and a massive talent base, now protected by an expanded state incentive.
• The Tri-State Area: Becoming a massive, integrated hub for television and feature film production, anchored by high-tech soundstages and proximity to New York City.
• The Southern/Central Decline: States like Georgia, New Mexico, and Illinois must now decide whether to double down on their incentives or pivot their strategy to attract a more diverse range of productions to prevent further "flight."

4. The Talent Drain

The shift in production spend carries with it a secondary impact: the migration of the workforce. As production spend in New York and New Jersey hits record highs, the demand for local crews, grips, lighting technicians, and post-production specialists will grow. This likely signals a long-term exodus of film professionals from high-cost-of-living areas in the West to the burgeoning hubs on the East Coast, further cementing these states’ long-term viability.

Conclusion

The Q2 2026 data confirms that the era of "Hollywood as a place" is truly over. Hollywood is now a mobile ecosystem, and the states that recognize this are the ones winning the war for capital. Whether through the bold legislative gambles of New York or the strategic corporate partnerships of New Jersey, the geography of American storytelling is being redrawn by the bottom line. As California fights to retain its crown, the message to policymakers across the country is clear: to remain relevant, you must be predictable, you must be accessible, and above all, you must be incentivized.