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Tax incentive legislation aiding Hollywood was tucked into the mammoth $700 billion bailout plan signed into law Friday by President Bush.

The legislation, originally enacted in 2004 in an effort to stem runaway production, extends and expands an existing federal domestic production tax credit that had been set to expire at the end of this year. The credit was also modified to allow the incentive to be applied as an immediate deduction of the first $15 million spent on any film or TV program produced in the United States.

Previously, the incentive was only available to productions with a total cost of under $15 million. The modification is retroactive to January, allowing many more productions to take advantage of the incentive this year.

The legislation also increases the single-year deduction in production costs, from $15 million to $20 million, that film and TV productions may take if the costs are incurred in designated economically depressed areas.

The incentive was extended through December 2009. The projected cost of the incentive over 10 years is $478 million.

MPAA chief Dan Glickman hailed the legislation as being well timed to keep the film and TV biz working.

“This puts our industry, which employs 1.5 million Americans, on equal footing under the tax code with other leaders of the U.S. economy and will help keep jobs and film production here in the United States,” he said.

DGA prexy Michael Apted echoed Glickman’s sentiment.

“Given the very tough economic climate affecting every sector of this economy, we are extremely grateful that this legislation will help save so many jobs that would have otherwise been sent abroad as a result of runaway production,” Apted said.

Jean Prewitt, prexy and CEO of Independent Film & Television Alliance, said the legislation came after a year-long push by the industry’s anti-runaway production coalition.

She noted that the incentive’s “targeted provisions have proven to be of real assistance in keeping independent production and jobs here in the United States.”

(The Associated Press contributed to this report.)