California Increases Film and Television Tax Credit Program
Nine months ago, Governor Gavin Newsom committed to more than doubling the annual funding for California’s Film and Television Tax Credit Program.
Standing alongside Mayor Karen Bass and a union representative, Newsom emphasized the need for the state to take significant actions. Hollywood, he noted, originated in California, making the entertainment industry a hallmark of the state. However, he remarked, “the world we invented is now competing with us.”
This Wednesday, Newsom signed legislation raising the cap on the Film and Television Tax Credit Program from $330 million to $750 million. Industry professionals believe this increase will help revive a slowing production landscape affected by the 2023 pandemic, concurrent writers’ and actors’ strikes, and diminished spending from studios and streaming services, not to mention the Southern California wildfires earlier this year.
“We have to bolster our game,” Newsom stated during the bill signing event. “We were complacent and took things for granted. We needed to do something bolder and more significant.”
The bill, which passed through the state legislature last week, followed intense lobbying efforts from Hollywood stakeholders.
Rebecca Rhine, from the American Executive Union, commended Newsom for striving to enhance production incentives despite the recent wildfires. She highlighted the entertainment industry as vital to California’s economy and cultural richness, contributing to thousands of businesses and drawing visitors globally. “Now, let’s get people back to work,” she said during the signing.
However, there are critics of the program, including taxpayer advocates, who argue that the tax credit functions as a corporate giveaway with economic benefits that often fall short of expectations. Other states like Texas and New York have responded by increasing their own film and television tax credits as California ramps up its efforts.
Nevertheless, the conversation isn’t over. Lawmakers and Hollywood leaders are preparing to vote on a separate bill aimed at broadening the tax credit program.
This legislation, known as AB 1138, expands the range of eligible productions to include animated films, shorts, series, and certain large-scale competitive shows. It also raises the tax credits to 35% of eligible spending for productions in the Greater Los Angeles area and up to 40% for those filmed elsewhere.
Currently, California provides a tax credit of 20% to 25% to help offset production costs for film crews and facilities. With the increase to 35%, California is aligning itself with incentives offered by other states like Georgia.
“This bill represents a second step,” said MP Rick Chavez Zbur during a press conference on Wednesday. “It’s about maximizing economic impact, ensuring fairness, and tackling unemployment.”
Newsom also expressed optimism regarding potential federal film and television tax incentives which emerged following President Trump’s suggestion for tariffs on films produced outside the U.S.
“I want to see it [Trump]. Today, California aligns with ambitions to continue filmmaking across the United States.”
