Mexico has officially entered the global production incentive race with the announcement of a new national cinema tax credit, but the move is not expected to shift the competitive landscape for established U.S. production hubs like Illinois.
In mid February, Mexican President Claudia Sheinbaum unveiled a proposed federal tax incentive aimed at attracting more domestic and international film and streaming projects to shoot in Mexico. The plan includes a tax credit of up to 30% on qualifying production expenditures, with requirements that a significant portion of spending remain with Mexican suppliers and workforce.
The announcement, supported publicly by actress and producer Salma Hayek, is part of a broader cultural and economic strategy to expand Mexico’s audiovisual sector and modernize the country’s film policy.
Mexico’s Tax Incentive is Announced, But Not Yet Fully Implemented
It is also important to note that Mexico’s cinema tax incentive is still in an early implementation phase. It has been officially announced and positioned to begin, but hasn’t yet fully taken effect as a passed law or formally published regulation at the federal level. More information on eligibility criteria, how and when producers can claim the credit, and detailed guidelines are expected once the legal framework is formally published.
At its core, Mexico’s proposed package includes:
- Up to a 30% tax credit on eligible production spending incurred in Mexico capped at 40 million Mexican pesos (about $2.5 million)
- Productions must source at least 70% of goods and services domestically and include participation from a Mexican production company
Illinois Remains a U.S. Production Powerhouse
While Mexico’s announcement is drawing attention, Illinois continues to operate from a far more established incentive and infrastructure base.
Illinois Tax Incentive (Expanded Under SB 1911)
Illinois has recently strengthened its program through Senate Bill 1911, creating a more competitive and stackable incentive structure beginning July 1, 2025. The program is currently described as scheduled for legislative renewal in 2039.
Key Illinois incentives include:
- 35% credit on Illinois resident labor expenditures
- 35% credit on qualified spending with Illinois vendors
- 30% credit on wages paid to non-resident crew and talent (with limits and tiered eligibility)
Bonus credits that can be added:
- +15% bonus for wages paid to Illinois residents from economically disadvantaged areas
- +5% bonus for Illinois productions filming outside the Chicago metro six-county area
- +5% bonus for television series relocating to Illinois
- +5% bonus for productions certified with a green sustainability plan
Additional provisions:
- Airline tickets purchased from Illinois-headquartered carriers now qualify as production expenses
- Credits are transferable and may be carried forward for up to five years
Those enhanced rates reflect Illinois’ ongoing strategy to keep production, post, and long-running series work anchored in Chicago, supported by long-running infrastructure, experienced union crews, and major soundstage capacity anchored by facilities such as Chicago Studio City, The Field’s Studios, CineCity Studios, Cinespace Studios, and Flyover Film Studios in Central Illinois.
For producers, that competitive combination continues to make Illinois a first-choice location.
Different Incentives, Different Competitive Lanes
Mexico’s proposal is widely viewed as an effort to compete more directly with other Latin American and international jurisdictions that have successfully attracted global streaming productions in recent years.
Illinois, meanwhile, continues to compete aggressively with other top U.S. incentive states for high-budget studio projects, particularly television production, where Chicago remains one of the country’s most active markets.
The Bigger Picture
Mexico’s incentive launch reflects the broader reality that production has become a global marketplace. The message is clear: incentives matter.
Illinois is well positioned to keep winning production business because it combines a competitive credit with world-class crews, infrastructure, and a proven track record.
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