North Carolina has spent decades building a substantial film and television industry. The state offers experienced crews, varied locations and established production infrastructure.
It also offers taxpayer-supported incentives.
Under North Carolina law, qualifying productions can receive grants of up to 25% of qualifying in-state expenses. The state's 2026 budget increased the maximum award for certain large productions to $20 million for a feature film or non-scripted season and $25 million for a scripted or television season.
Those incentives have recently become controversial as productions consider taking their business elsewhere.
The Hunting Wives, which filmed its first two seasons in North Carolina, has indicated that a potential third season could move to Georgia amid the North Carolina incentive-funding dispute. Outer Banks creator Jonas Pate has said he would like to film his planned prequel, Kildare, in Wilmington, but has also explored Charleston as North Carolina's incentive situation remains unsettled.
State officials and legislative leaders disagree over the causes of the funding problem and how the program should operate.
But underneath that political dispute is a much more interesting economic question.
Should North Carolina be paying film companies to come here in the first place?
Film production unquestionably generates economic activity.
The Case for the Incentive
According to the North Carolina Department of Commerce, film and television productions generated approximately $185.5 million in direct in-state spending during 2025. Thirty-eight productions filmed in the state, with activity in 45 counties. Commerce reports more than 7,000 crew, talent and background-extra job opportunities.
Over the past decade, Commerce says productions have spent more than $1.3 billion in North Carolina.
That spending reaches far beyond actors and directors. Productions employ carpenters, electricians, drivers, caterers and production crews. They rent hotel rooms, vehicles and equipment and purchase food, construction materials and other services.
North Carolina also competes against states willing to pay aggressively for this business. South Carolina offers production incentives of its own, while Georgia operates one of the country's largest film tax-credit programs.
A state therefore faces a practical problem: it can oppose subsidy competition in principle while still losing productions to states willing to participate in it.
But $185.5 million of production spending is not the same thing as $185.5 million of net economic benefit to North Carolina taxpayers.
Spending Is Not the Same as Economic Benefit
The relevant economic question is the counterfactual:
What would have happened without the subsidy?
Some productions might have gone elsewhere. Others might have filmed in North Carolina anyway because of its workforce, infrastructure, locations and costs.
There is also an opportunity cost to the public money devoted to incentives. Government could spend those dollars elsewhere, reduce taxes or leave the resources in private hands.
This is an application of the distinction associated with the 19th-century French economist Frédéric Bastiat: the seen and the unseen.
The film crew working in Wilmington is visible. So is the restaurant filled with actors and technicians.
Much harder to see is the economic activity that might have occurred if the resources used for the subsidy had remained elsewhere in the economy.
Georgia demonstrates both sides of the argument.
Its generous film incentives have helped build a major production industry. But a 2023 evaluation prepared by Georgia State University's Fiscal Research Center for the Georgia Department of Audits and Accounts projected that the state's fiscal return would amount to roughly 15 to 19 cents of state revenue for each dollar of film tax credit during fiscal years 2024 through 2028.
That does not mean film production creates no economic value. The same analysis identified substantial economic activity associated with the industry.
A Warning From Georgia
It does demonstrate something important, however:
Economic activity and taxpayer return are not the same measurement.
A production can create jobs and spending while still costing state government considerably more in incentives than it recovers in additional tax revenue.
There is another free-enterprise question.
Imagine two entrepreneurs arrive in Raleigh.
One wants to spend $10 million producing a television series. Another wants to spend $10 million building an ordinary business.
Why should government subsidize one but not the other?
Restaurants create jobs. Manufacturers employ electricians and construction workers. Technology startups hire programmers. Small businesses lease buildings, purchase supplies and pay wages.
Targeted incentives necessarily require government to decide which economic activities receive preferential treatment.
That moves at least some investment decision-making away from markets and toward government.
Yet eliminating North Carolina's film incentive tomorrow would not create a national free market.
It could simply send productions to Georgia or South Carolina.
That creates something resembling a prisoner's dilemma among states. States collectively might be better off competing through lower taxes, better infrastructure, skilled workers, reasonable regulation and quality of life rather than targeted subsidies.
Why Film?
But an individual state that stops offering incentives can lose investment to states that continue offering them.
That is an important economic argument advanced in favor of maintaining North Carolina's program, and advocates of limited government should take it seriously.
North Carolina should therefore ask a harder question than whether film incentives "create jobs."
Almost any expenditure creates economic activity somewhere.
The better questions are how much production actually depends on the subsidy; what taxpayers receive in return; what alternative uses of those resources might produce; whether a temporary incentive creates a durable industry; and whether selectively subsidizing one business activity is better than improving the economic environment for every business.
North Carolina already possesses significant competitive advantages: growing cities, major universities, an established production workforce, varied geography and substantial film infrastructure.
The long-term goal should be an economy in which companies choose North Carolina because it is an exceptional place to invest, hire and create—not simply because government offered the largest check.
Film production is worth having.
But so is every productive enterprise competing for workers and capital.
The Interstate Subsidy Trap
The larger free-enterprise principle is therefore worth remembering:
The healthiest competition is ultimately competition among businesses—not competition among governments over who can subsidize them most.