The $140 million federal budget sweetener will effectively double the existing rebate offered for films to 30 per cent.
"Many, many producers want to make films in Australia because they love our talent, they love our people," Communications Minister Mitch Fifield told reporters on the Gold Coast on Friday.
"What this does is it gives them the excuse, and the reason, to do just that."
Foreign Minister Julie Bishop believes Australia needs the added incentive to remain competitive in the ultra-competitive world of international film and television production.
Ms Bishop is confident the cash injection will guarantee a pipeline of work for studios, which often lay empty.
"I'm delighted that this will mean more jobs for talented, skilled Australians," Ms Bishop told reporters.
"Whether it's in acting, producing, directing, set design, animation, cinematography, make-up, hair-styling - all the components that make up a brilliant film production here in Australia."
Queensland Premier Annastacia Palaszczuk said Canberra had finally seen sense in her long-standing call to ease the tax hit on foreign films, and announced a roadshow to the US to drum up business.
"(It) finally makes Australia world-competitive when it comes to luring international movie-makers," she said in a statement.
Ms Palaszczuk said the tax break was a game-changer for Queensland, paving the way for a pipeline of movies and a permanent screen industry.
The premier will lead a delegation to Hollywood in June.
Federal Labor frontbencher Penny Wong was lukewarm about the incentive.
"I think the best thing the budget could do is not cut $17 billion to schools, and instead of giving the banks a $70 billion tax cut, how about we give our schools a bit more money and stop the cuts to Medicare," Senator Wong told the Nine Network.
"I think those are the things the Australian people would really welcome in the budget."
