HITS Act: New Tax Law Will Benefit Independent Musicians and Producers
Aug 14, 2025 | Law Student Blog,
By Olivia Miller, Southern Illinois University Simmons Law School, Juris Doctor Candidate, 2027
The music industry is celebrating the recent passage of a new federal tax law that will allow independent musicians and producers to deduct up to $150,000 in sound recording expenses incurred within a single tax year. The Help Independent Tracks Succeed (HITS) Act was crafted by the Recording Academy in 2020, and introduced in the House by California Congresswoman Linda Sánchez and Kansas Representative Ron Estes. After five years of unwavering advocacy by Rep. Sánchez, Rep. Estes, and members of the Recording Academy, the bi-partisan bill was signed into law on July 4, 2025.
What is the HITS Act?
The HITS Act allows independent musicians and producers to deduct up to $150,000 of qualifying production and sound recording expenses in a single year. In accordance with existing tax law, independent musicians were previously required to distribute the cost of making music over several years in an effort to amortize the “economic life of a sound recording.” This economic hurdle slowed down or nearly stalled the production and creation of self-funded EPs, albums, and singles.
During the Covid-19 pandemic, independent music creatives suffered great economic losses due to their lack of the ability to perform live shows and collaborate with other creators to make music in-person. The HITS Act was proposed by the Recording Academy as an answer to the cash flow problems many self-funded artists and producers still face today.
Who and what qualifies under the HITS Act?
Independent music creators qualify under the HITS Act, including musicians, producers, songwriters, composers, and engineers. Qualifying expenses include mixing and mastering costs, equipment purchases and rentals, session musician fees, and studio rental costs.
What is the biggest benefit of the HITS Act?
The biggest benefit of the HITS Act will be the financial relief independent music creators experience when filing taxes. Since the HITS Act allows a deduction of up to $150,000 of qualifying sound recording expenses, it could lead to lower tax payments or even a refund. In a nutshell, the HITS Act frees up cash flow for independent music creatives, establishing a new financial environment that allows for artists and producers to invest their earnings back into music making.
How will the HITS Act positively impact the entertainment industry?
The HITS Act will allow independent creatives within the music sector of the entertainment industry to positively benefit from yearly tax deductions—just as independent creatives in the film, television production, and theatrical sectors of the industry have for years. It is likely that there will also be an increase in new music released in digital and physical mediums, as cash begins to flow more freely. Although this bill is new, industry professionals, creatives and advocates are optimistic that the HITS Act is already paving the way for a more incentivized music industry.
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