California Governor Gavin Newsom proposed on November 2 raising the state’s film and television tax credit to at least $1 billion a year. The California film tax credit currently stands at $750 million a year, after an expansion last year lifted it from $330 million. Newsom’s proposal would extend the program through 2040, add credits for above the line talent, set aside $100 million a year for independent productions, and give a 5 percent boost to companies that commit to at least two qualifying productions in California.
Newsom announced the plan a day before California voters elect his successor in the midterm elections. He is term limited and leaves office in January 2027, so the next governor and legislature must agree before it becomes law.
What the California film tax credit proposal includes
The California film tax credit proposal would lengthen the program’s sunset from five years to ten years, a change the governor’s office said would give productions more predictability for long term planning. Above the line compensation, which covers leading creative talent, would become a qualified expenditure, subject to funding caps. Independent film funding would rise to $100 million a year, up $26 million from the current program, according to Deadline’s account of the plan.
Newsom also renewed his call for Congress to pass the Motion Picture, Television and Entertainment Revitalization Act by the end of the year. That federal bill would create a 20 percent federal film and television tax credit that could stack with state programs. The governor’s office said states cannot carry the cost alone, and Newsom said in a statement that California created the modern entertainment industry and intends to keep it in the state.
Results claimed since the last expansion
Since its start in 2009, the California film tax credit program has generated more than $35.4 billion in economic activity and supported more than 248,000 cast and crew jobs across California, according to the governor’s office. For every $1.00 of tax credit awarded in years past, the state has seen $24.40 in economic output, $16.14 in gross domestic product and $8.60 in wages, TheWrap reported from the governor’s figures.
The first year after last year’s California film tax credit expansion produced strong results, the governor’s office said. Applications rose 82 percent year over year. Direct production spending reached $8.25 billion, including $5.3 billion in qualified expenditures and $3.2 billion in qualified wages. The program supported more than 43,000 cast and crew jobs, and filming days in the state passed 8,600.
Why California is pushing again
Hollywood has lost more than 50,000 industry jobs in the past six years, TheWrap reported, as California was hit by the COVID-19 pandemic, wildfires, dual labor strikes by SAG-AFTRA and the Writers Guild of America, media consolidation, and competition from other states and overseas. New York provides $800 million a year in film tax incentives, Bloomberg Tax reported, while Georgia offers uncapped credits of up to 30 percent. The California film tax credit would remain the largest capped program in the United States if raised to $1 billion, the governor’s office said.
California Film Commission Director Colleen Bell welcomed the proposal. She said the credit has become one of the state’s most important tools to increase production in California, support crews and strengthen the creative economy. Assemblymember Rick Chavez Zbur, who represents Hollywood, also backed the plan.
Unions welcome the direction, with reservations
Hollywood unions gave the proposal a wary welcome. The Entertainment Union Coalition, which includes SAG-AFTRA, IATSE, the Directors Guild of America, Writers Guild of America West, the Teamsters, the American Federation of Musicians and LiUNA, thanked Newsom but said the pressure now passes to his successor. The coalition wants what it called a proportionate response that modernizes structural limits on the program, ScreenStat reported.
Teamsters Local 399 secretary-treasurer was blunter, calling the proposal a day late and yet again, some dollars short. The union argues California should uncap the California film tax credit to compete with New York and international territories, and keep pushing for a federal incentive that lawmakers introduced in Congress in September. The $1 billion floor is not law yet, and the next governor and legislature must agree on the final shape of any expansion.
California film tax credit and the road ahead
The current expansion runs through 2030 as a $3.75 billion investment over five years. A California film tax credit move to at least $1 billion a year, with a sunset extended to 2040, would stretch that commitment well beyond the current window.
For now, The proposal is Newsom’s closing pitch on film and television jobs: a bigger California film tax credit, more money for independent films, and a federal credit on top. Whether it survives the change of governor depends on negotiations in Sacramento after the midterm elections.