SAG-AFTRA Pushes ‘Tilly Tax’ on AI Characters in Contract Talks

SAG-AFTRA is negotiating a contractual levy on fully AI-generated film characters—referred to as the “Tilly Tax”—in ongoing talks with studios and production companies. Bloomberg reported on the proposal on March 28, 2026. The union’s head stated that organized labor is serving as “an important check on how the technology gets used” as AI adoption in US film and television production moves faster than any regulatory response.

What Happened

SAG-AFTRA, the union representing film and television performers across the United States, is pushing for a new contractual fee on AI-generated characters in Hollywood productions during ongoing negotiations with major studios and production companies. The proposal, referred to as the “Tilly Tax,” was reported by Bloomberg on March 28, 2026. The origin of the “Tilly” designation was not explained in the Bloomberg report.

The union’s head stated that organized labor is “an important check on how the technology gets used,” framing the bargaining position as a necessary governance function at a moment when AI deployment in entertainment is accelerating beyond the reach of existing US regulation. Author details for the Bloomberg report were not available at time of publication.

Why It Matters

The “Tilly Tax” proposal marks a strategic shift in how entertainment unions are engaging with AI—moving from defensive protections against individual performer displacement toward a framework that attaches a direct financial cost to AI-generated characters as a category of production choice.

SAG-AFTRA’s last major contract cycle, which culminated in a strike that ran for approximately four months in 2023, placed AI protections at the center of negotiations. The resulting agreement established baseline provisions around the use of performers’ digital likenesses, but the union and many members argued those terms were insufficient given the trajectory of AI development. Since then, fully synthetic character generation—requiring no human casting, no physical performance, and generating no residual obligations under existing frameworks—has become a realistic option for studios, intensifying the need for updated contractual terms.

The union’s framing—describing labor as an “important check” rather than a blocker—reflects a deliberate negotiating posture: SAG-AFTRA is not seeking to prohibit AI characters outright, but to ensure their use carries a financial consequence that compensates for displaced human work.

Technical Details

As reported by Bloomberg, the “Tilly Tax” specifically targets AI-generated characters—fully synthetic figures produced without any human performer contribution. This is a technically distinct category from AI-assisted tools that enhance or support human actors, de-aging effects, background automation, or visual effects processes. The distinction matters contractually: it limits the proposal’s scope to complete character replacement rather than the broader class of AI-assisted production techniques.

The Bloomberg report did not disclose the proposed rate structure for the levy. It is not publicly known whether the tax would be assessed per character created, per production day, per minute of runtime, or as a percentage of a production’s total AI-related expenditure. The mechanism for distributing any collected revenues—whether to a general union fund, individual affected performers, or a training and welfare program—was also not specified in the report.

The absence of a disclosed rate structure suggests the proposal is in an early stage of bargaining, with foundational questions about calculation methodology and enforcement still unresolved between the parties.

Who’s Affected

The direct counterparties to these negotiations are studios and production companies negotiating under the Alliance of Motion Picture and Television Producers (AMPTP) framework. A ratified agreement would bind those signatories and establish a precedent that independent producers and streaming platforms would face pressure to match in their own deals with the union.

For working actors—particularly those in character, ensemble, and mid-tier roles that are most susceptible to synthetic replacement—the proposal addresses a concrete structural gap: productions that generate characters entirely through AI currently bear no obligation under residuals frameworks to compensate any human performer. Technology vendors and VFX studios whose tools enable full character generation would be indirectly affected, as studios factor compliance costs into production and vendor contracts.

What’s Next

SAG-AFTRA has not announced a timeline for completing these contract negotiations, and no public response from studio negotiators has been reported following Bloomberg’s March 28, 2026 coverage. The proposal’s current status—whether it has been formally tabled, countered, or remains in preliminary discussion—was not detailed in the Bloomberg report.

For the “Tilly Tax” to take effect, it would need to be ratified by SAG-AFTRA’s membership and agreed to by the relevant studio body. Key open questions include the rate structure, the threshold definition of what qualifies as an “AI-generated character” under any final agreement, and the enforcement mechanism. The lack of clarity on these foundational points, combined with the absence of a disclosed studio response, indicates the proposal has a significant distance to travel before any contractual implementation.

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