California legislators are working on a proposal to increase the state’s film tax credit to attract more movie and TV productions. The plan aims to cover up to 35% of qualified expenses for films and TV shows shot in the Los Angeles area. Productions outside the region could receive up to 40%. These changes are part of new bills introduced in the California State Assembly and Senate to make the state’s program more competitive with other states and countries.
California’s Film Tax Credit: A New Push for Competitiveness
The proposed tax credit increase seeks to boost California’s standing in the entertainment industry, which faces fierce competition from other states. Assemblymember Rick Chavez Zbur, one of the bill’s co-authors, emphasized the need for California to stay competitive. “We have the infrastructure and skilled workforce. But other states are investing in their programs, which makes them increasingly competitive,” he said.
California’s current film tax credit ranges from 20% to 25% for qualified production expenses, such as crew costs and set construction. The new proposal would raise the base credit to 35% for films shot in the Los Angeles region. For productions filmed outside this area — stretching to places like Ontario International Airport and Pomona — the credit could increase to 40%.
Why This Matters to Hollywood Productions
The goal of this boost is to attract more Hollywood productions back to California, where the entertainment industry has deep roots. The proposal aims to offer tax incentives that can compete with states like Georgia, which already offers up to 30% in credits for qualified production expenses. California’s tax credit will be applied mainly to “below-the-line” costs, including set construction, labor, and other essential services needed for film production. This tweak makes California’s tax credit more competitive by matching or surpassing the benefits offered by other states.
Expanding Eligible Productions
The proposed tax credit expansion would also widen the types of productions that qualify. In addition to traditional films and TV shows, animated films, shorts, and certain large-scale competition shows (like “Dancing With the Stars”) would be eligible. However, traditional reality shows, talk shows, and documentaries would not qualify under the new rules.
This expansion is designed to bring in a broader range of projects, increasing the state’s ability to draw various types of productions. Zbur explained, “The changes will help bring more jobs to the state and create new opportunities for all kinds of productions.”
Addressing Workforce Needs
The bill’s backers are also working to ensure that the program includes provisions to employ underrepresented communities in the film industry. While some aspects of the proposal, such as independent film eligibility and workforce diversity measures, are still being negotiated, the legislators are determined to make sure the industry benefits a broad range of workers.
A Bigger Budget for a Bigger Impact
In addition to the tax credit increase, California Governor Gavin Newsom has proposed more than doubling the money allocated to the film and TV tax credit program. This budget boost would provide $750 million annually to the program, with the goal of enhancing California’s competitiveness in the global film industry. The proposed funding must be approved as part of the state’s budget process.
California’s film tax credit program has already had a significant impact. According to State Senator Ben Allen, it has created nearly 200,000 jobs and generated $26 billion in economic activity across the state. However, more productions apply for credits than can be awarded, leading to many projects seeking tax incentives in other states. “Over 75% of projects that are rejected here end up going elsewhere,” Allen pointed out.
As the bills continue to progress through the California State Assembly and Senate, lawmakers are working out the details with stakeholders in the industry. If the new tax credits pass, California could see a substantial increase in production activity, job creation, and economic growth.
For Hollywood, which has long been the heart of the film industry, this proposal is seen as a much-needed step to ensure the Golden State remains a top destination for movie and TV production. With competition from other states heating up, the outcome of this legislation could determine how much of the film industry stays rooted in California for years to come.
California’s proposed increase to its film tax credit program represents a significant effort to maintain the state’s role as a leader in the entertainment industry. With changes designed to attract more productions and create more jobs, the new proposal could make California more competitive with states offering similar incentives. As negotiations continue, it’s clear that California is committed to keeping the spotlight on Hollywood.
