After months of lobbying, the California state legislature has approved an increase in the cap for the state’s film and TV tax incentive program from $330 million to $750 million. The vote was passed 31-3.
The vote on the trailer bill to formally approve the cap increase took place on Friday, three days after lawmakers reached a final deal with Gov. Gavin Newsom on the state’s $321 billion budget for the coming fiscal year.
Newsom had made the incentive program cap raise a key policy goal for 2025, announcing his support for it last October and keeping the cap in his revised budget proposal this past spring amidst cuts in several other programs, including a proposal to cut Medi-Cal for undocumented residents.
“The Entertainment Union Coalition applauds today’s announcement that the increased funding to our California Film and Television Tax Incentive Program is now official,” Rebecca Rhine, DGA Western executive director and president of the Entertainment Union Coalition, said in a statement. “Since Governor Newsom announced his intention to prioritize our program’s expansion late last year, our members’ activism has been the core driving force in our fight to retain and bring back good industry jobs to our state.”
She continued: “After numerous trips to Sacramento and over 250,000 letters to elected officials, our governor and state legislature followed through on their commitment to our members, their families, and the many small businesses that our industry supports. More than doubling the program’s allotted cap to $750 million annually underscores just how vital our industry is to the economic health of our state, and the power of our members’ voices. The expanded funding of our program is an important reminder of the strength and resiliency of our members, the power of our broad-based union and guild coalition, and the role our industry plays in supporting our state’s economy. It’s now time to get people back to work and bring production home to California. We call on the studios to recommit to the communities and workers across the state that built this industry and built their companies.”
With this raise, California’s tax incentive program now stands as the third highest tax incentive program in the country behind Georgia, which has no cap and handed out $887 million in tax credits last year, and New York, which last month raised its cap to $800 million.
The final step for lawmakers is to pass Assembly Bill 1138, which codifies changes in the eligibility rules for the program to allow more productions to apply. Among the changes is a reduction in the run time required to allow half-hour television programs to apply, as well as opening the door for animated productions to be eligible.
The bill also raises the tax credit rate for eligible spending from 20% to 35% if the production films in Los Angeles County or in popular filming locations adjacent to the county, a move done to encourage employment of production workers in the city after the economic toll taken on them from the pandemic, the 2023 writers and actors’ strikes, and this past January’s wildfires.
Authors of AB 1138, which has already passed the state assembly, are looking to get the bill passed through the state senate and approved by Gov. Newsom next week in time for the opening of the incentive’s next application period on July 7.
