California Governor Gavin Newsom announced a proposal on Monday to expand the state’s film and television tax credit program to at least $1 billion annually. The initiative arrives just a year after the state more than doubled its annual incentive funding to $750 million.
Under the newly proposed framework, the state tax credit would incorporate above-the-line talent, including actors, directors, and other high-profile production personnel. This adjustment aims to align California’s incentive structure with competing states like Georgia and Illinois, which have drawn production work away through lucrative credit programs over recent decades.
The governor’s plan also establishes a dedicated annual allocation of $100 million specifically for independent productions. Additionally, the proposal would extend the tax credit program through 2040, replacing the current expiration date of mid-2030 and providing studios and producers with extended predictability for long-term project planning in the state.
Los Angeles has experienced extensive losses in motion picture industry employment due to runaway production, with projects relocating to domestic and international regions offering aggressive incentives. Between 2022 and 2024, Los Angeles County shed more than 42,000 motion picture sector jobs. In a statement regarding the proposal, Newsom asserted that an incentive of at least $1 billion would drive increased investment into the state economy and expand opportunities across the entertainment sector.
Despite growth under this year’s expanded credit, overall production metrics remain uneven. FilmLA, the nonprofit film office for the greater Los Angeles region, reported that on-location filming dropped 4.8% from July through September. However, projects enrolled in the state’s film incentive program accounted for slightly more than 40% of scripted on-location filming during that three-month window, representing nearly double their market share from the same period a year prior.
The announcement follows a recent legislative scramble in California to stabilize the state’s production incentives after an unintended provision in the governor’s budget-related tax bill, SB 122. That measure extended a $5 million annual cap on business tax credits, which restricted the financial value production companies could claim annually. Lawmakers subsequently implemented adjustments to protect the production incentive program from those limitations.
Meanwhile, federal lawmakers introduced a bipartisan production incentive bill in the House and Senate months prior, targeting passage during the upcoming congressional lame-duck session. That federal legislation seeks to counter the migration of productions to foreign nations like the United Kingdom and Australia, which provide substantial national incentives. The prospects for passing the federal bill remain uncertain.
President Donald Trump previously voiced strong backing for a federal production incentive measure, stating on social media that Congress should enact it immediately. However, during a Florida rally on Friday, Trump expressed mixed views, indicating he would “probably do it” while simultaneously voicing frustration with entertainment figures who had previously criticized him before seeking his support for the legislation.
“This is a funny thing: they’re all calling me, kissing my ass — they want tax credits for Hollywood because Hollywood’s dying,” Trump told the rally crowd, which responded with loud boos. “And I’ll probably do it. Should I do it? Probably.”
