California Governor Gavin Newsom has signed a bill that raises the annual cap on the state’s film and television tax credit program to $750 million, a significant increase from the previous $330 million.
This move aims to revitalize production in the state, which has faced a slowdown due to several challenges in recent years, including the COVID-19 pandemic, the writers’ and actors’ strikes of 2023, a reduction in studio spending, and even the Southern California wildfires.
The signing of the bill marks a key step as the state attempts to retain its status as a leading hub for the entertainment industry.
While signing the bill, Newsom emphasized the importance of taking bold actions to compete with other states and countries that are enticing productions away with more attractive tax incentives.
‘We’ve got to step up our game,’ he stated, acknowledging that California’s industry has been under threat from external competition.
Accompanied by Los Angeles Mayor Karen Bass, lawmakers, and industry representatives, Newsom reiterated the need for California to reaffirm its commitment to the film and television sector, which has historically played a crucial role in the state’s economy.
Rebecca Rhine, the Directors Guild of America executive and president of the Entertainment Union Coalition, praised Newsom for his dedication to boosting production incentives, citing various challenges the state has faced, from budget deficits to natural disasters.
‘You understand that our industry is vital to the state’s economy and cultural vibrancy,’ Rhine said during the signing ceremony, calling for swift action to get production workers back to work.
Despite the enthusiasm from industry insiders, critics have voiced concerns regarding the tax credit program, labeling it as a corporate giveaway that may not deliver the promised returns on investment.
The increased cap comes at a time when other states such as Texas and New York have also expanded their own film and television tax credit offerings, heightening the competitive landscape.
The legislative effort is not stopping here; a separate bill, AB 1138, is scheduled for a vote that could further redefine the tax credit program.
This proposed legislation aims to broaden the types of productions that could qualify for benefits under the program, including animated films, shorts, series, and select large-scale competition shows.
Additionally, AB 1138 seeks to enhance the tax credit to as much as 35% for productions based in the Greater Los Angeles area and up to 40% for those outside that region, elevating California’s offerings to match or exceed incentives provided by competing states.
Currently, the state provides a tax credit ranging from 20% to 25% to offset qualified production expenses, which include costs associated with crew salaries and set construction.
The proposed increase aims to create a more compelling environment for filmmakers, aligning California’s incentives with those offered by states like Georgia, which provides a 30% credit.
Assemblymember Rick Chavez Zbur described the new bill as a crucial follow-up to the increased cap, focusing on maximizing economic impact and addressing job loss across the industry.
Moreover, Newsom expressed optimism about the potential for a federal film and television tax incentive, suggesting it could complement California’s efforts.
He pointed out that he had previously raised this idea in discussions with President Donald Trump, particularly after Trump suggested imposing tariffs on films produced overseas.
‘We’d like to see [Trump] match the ambition that we’re advancing here today in California,’ Newsom remarked, expressing hope for collaborative efforts with the federal administration to support filmmaking across the nation.
As California takes these bold steps to enhance its film and television tax credit program, industry leaders and workers alike are hopeful that these changes will stimulate job growth and solidify the state’s position as the heart of the entertainment world.
image source from：latimes
