California has officially approved a major expansion to its Film and TV Tax Credit, signaling a powerful move to reclaim its status as Hollywood’s production epicenter.
On Friday, a budget bill increasing the state’s annual cap on film and television tax incentives from $330 million to $750 million sailed through the state Assembly and Senate.
A Big Win for Hollywood
First introduced by Governor Gavin Newsom in fall 2024, the proposal faced initial skepticism.
But support surged, with the State Assembly voting 64 to one and the Senate voting 31 to three in favor of the increase.
Once enacted, California will become the most generous state for film and TV tax credits outside of New York and Georgia (which has an uncapped program).
The Entertainment Union Coalition, a key lobbyist for the bill, praised the move, stating it “underscores just how vital our industry is to the economic health of our state, and the power of our members’ voices.” The coalition also urged studios to take advantage of the expanded Film and TV Tax Credit, encouraging them to recommit to local workers and communities.
Program Changes and New Opportunities
The legislation introduces sweeping changes to the program — the largest since its creation in 2009. Among the notable updates:
- The base credit will increase to 35 percent.
- Eligibility expands to include shorter TV series, sitcoms, animated titles, and large-scale competition shows (excluding reality, documentary, game, and talk shows).
- It eliminates the requirement for soundstage construction incentives to be tied to ownership or long-term leases.
Proponents are racing to implement these changes before the current application window closes on July 7. Productions looking to secure the new Film and TV Tax Credit incentives are working to meet this tight deadline.
Economic Impact and Future Outlook
The expansion provides funding through 2035, potentially funneling up to $1.5 billion in subsidies into Hollywood over the next decade. California remains unique among major production hubs for excluding above-the-line costs — such as actor, director, and producer salaries — from qualifying for credits.
State officials argue that the expanded Film and TV Tax Credit will not only pay for itself but stimulate substantial economic activity. Dee Dee Myers, senior adviser to Governor Newsom, emphasized at the UCLA Entertainment Symposium, “The program not only pays for itself but generates economic activity. It’s a good deal for taxpayers.”
The urgency behind this move comes amid a worrying decline in local production. According to FilmLA, the nonprofit overseeing film permits in Los Angeles, filming dropped over 22 percent in the first quarter of this year compared to 2023. Meanwhile, other states have aggressively ramped up their own incentives — Texas, for example, recently added $100 million to its film and TV support program.
Looking Ahead
With California’s enhanced Film and TV Tax Credit, the state aims to reverse the outflow of productions and reassert itself as the global center of entertainment. Studios now face a clear invitation: return to California and invest in the communities that built the industry.
