California Lawmakers Reach Historic $750 Million Deal to Boost Film and TV Tax Credits: What It Means for the Industry

California is set to boost its film and TV tax incentive to $750 million a year, a significant increase from the previous $330 million. This move is seen as a big win for both the entertainment industry and Governor Gavin Newsom, who first suggested the increase last October in response to a sharp decline in production activities.

The California Senate and Assembly leaders have embraced this funding level, with a vote scheduled to finalize this on Friday. Experts predict that this additional funding could support around 4,400 to 5,500 new jobs in the film sector, as stated by the California Film Commission.

Besides the funding boost, lawmakers are working on a companion bill, AB 1138, designed to expand benefits for a wider range of productions. The bill proposes increasing the tax credit from 20% to 35%, with a possibility of it rising to 40% for filming outside Los Angeles. This aims to encourage productions beyond the Hollywood bubble, reflecting a growing trend where filmmakers are seeking diverse locations for their projects. In fact, a recent survey indicated that over 50% of filmmakers are looking for incentives to shoot in less conventional areas.

AB 1138 will also open doors for sitcoms, animation, and larger competition shows to benefit from these incentives. Notably, the legislation intends to aid low-income communities by providing a 2% bonus for productions that hire trainees from underserved areas, emphasizing the importance of ensuring these trainees do not displace existing workers.

Furthermore, the program now requires productions to report not only the diversity of their workers by race, ethnicity, and gender but also to include geographic data, bolstering efforts for regional diversity in hiring. An increase in awareness about the need for greater inclusivity in filmmaking has resonated with many audiences and creators on social media, showing a shift in public sentiment towards equitable representation.

However, concerns remain that the incentives may still favor Los Angeles, home to more than 90% of California’s film workforce. Organizations like the Out of Zone Coalition argue for more equitable distribution, although their push for a larger incentive for non-L.A. productions was not accepted.

AB 1138 is expected to gain approval by July 4 and will take effect immediately afterward. The ongoing changes reflect a broader trend in the industry where support for variety in production locations and diversity in hiring are becoming increasingly important. For further insights into the economic impact of such incentives on local communities, you can refer to this California Film Commission report.

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California Film & Television Tax Credit