The CREATE Act and Canada’s Film Tax Credit War: What US Federal Incentives Mean for Ontario Production in 2026

What US Federal Incentives Mean for Ontario Production in 2026

My brother and I started this company in 2020. Back then, we were focused on one thing. Telling good stories. Six years later, we are still doing that. But the world around us has changed. The incentives that keep production in Ontario are under pressure like never before.

If you are a brand, a non-profit, or a business making video content in Ontario, you need to understand what is happening. Because what happens in Washington and Ottawa affects your bottom line.

Here is what you need to know.

What is the CREATE Act?

The CREATE Act stands for the Creative Relief and Expensing for Artistic Entertainment Act. It is a bipartisan bill introduced in the US House of Representatives in August 2025. The goal is simple. Keep film and television production in the United States.

Right now, Section 181 of the US tax code allows productions to deduct 100% of their production costs in the same year those costs are paid. That deduction was set to expire at the end of 2025. The CREATE Act extends it through 2030.

But that is not all. The bill also doubles the deduction caps. Productions can now deduct up to $30 million, or $40 million depending on the location. And starting in 2026, those caps will adjust annually based on the cost of living.

This is not small money. The US film and television industry supports 2.32 million jobs and pays out $229 billion in annual wages. The CREATE Act is designed to protect that.

What does this mean for Canada?

Canada has been a major beneficiary of US production moving north. Our incentives have been among the most competitive in the world. But the CREATE Act changes the math.

Canada’s real advantage has always been stacking. You get a federal 25% Canadian Film or Video Production Tax Credit on qualifying Canadian content. Then you layer provincial credits on top. In British Columbia, stacked credits can reach 65% or more of qualifying spend.

Ontario’s system is similar. The Ontario Film and Television Tax Credit offers up to 35% on eligible Ontario labour expenses. The Ontario Production Services Tax Credit offers up to 21.5% for service productions. There are also credits for animation, VFX, and digital media.

But the CREATE Act narrows the gap. US producers now have a stronger reason to stay home.

The response from Ontario

Industry groups are paying attention.

FilmOntario, the province’s leading film industry association, made three main requests in their 2026 budget submission. Increase the OFTTC base rate to 40%. Increase the OPSTC to 25%. And invest an additional $26 million into the Ontario Creates Intellectual Property Fund.

Their message is clear. Ontario needs to stay competitive.

Ontario Creates, the provincial agency that administers these credits, is also working to improve. They have committed to a 12-week service delivery standard for tax credit applications by 2026. Faster processing means less uncertainty for producers. That matters when you are choosing between Ontario and another territory.

The bigger picture

This is not just about tax credits. There is a broader fight happening.

In May 2026, the CRTC ordered American digital platforms to contribute 15% of their Canadian revenues to subsidize local independent film and TV production. Some in the Canadian industry worry this could backfire and drive production away.

Meanwhile, there have been proposals for US tariffs on films shot abroad. One proposal suggested a 100% tariff on US film products shot outside the country. Another proposed a 20% federal tax credit on labour costs for productions filmed in the US, with an additional 5% for independent productions.

The message from Washington is consistent. They want production to stay in America.

What this means for you

If you are a business, non-profit, or brand producing video content in Ontario, here is what you need to know.

First, production costs may rise. If US producers stay home, demand for Canadian crews and facilities could drop. That might mean less competition for resources, but it also means less volume overall. Economies of scale matter.

Second, the incentive landscape is shifting. Ontario is fighting to stay competitive. But they are fighting against a US federal government that is finally getting serious about keeping production at home.

Third, choose your production partner carefully. A full service agency that understands the incentive landscape can help you navigate this. We have been filming across the country since 2020. We know the Ontario system. We know how to make the most of it.

A few final thoughts

The CREATE Act is not a done deal yet. But it has bipartisan support. It is likely to pass. And when it does, it will change the competitive landscape for Ontario production.

Canada still has advantages. Our crews are world class. Our locations are diverse. Our incentives are still strong. But the gap is closing.

My brother and I started this company because we believed in telling good stories. That has not changed. But we are paying attention to the world around us. You should too.