California state lawmakers have reached a pivotal agreement to substantially increase the annual tax incentive program aimed at bolstering the state’s cornerstone film and television industry. The deal, forged this week by leaders of the Senate and Assembly, proposes more than doubling the program’s allocation, escalating it from the current $330 million per year to a robust $750 million annually.
This significant legislative consensus represents a key budgetary achievement for Governor Gavin Newsom, who initially advocated for the increase last October. The Governor’s proposal was a direct response to concerns over declining production levels within the state, a trend that has seen projects migrate to jurisdictions offering more competitive incentives.
Upcoming Vote and Budget Context
The funding package is scheduled for a vote on Friday, June 28, 2025. It is set to be included as part of a broader trailer bill, a legislative vehicle often used in California to enact changes necessary for implementing the state budget. This placement underscores the perceived importance of the film and television industry’s economic contribution to the state’s overall fiscal health.
Proponents argue that the expanded program is critical for retaining and attracting productions that generate high-wage jobs and stimulate local economies across California. The state’s vibrant ecosystem of studios, talent, and technical crews is seen as a valuable asset worth preserving and enhancing through strategic investment.
Projected Economic and Employment Impact
The potential economic ripple effects of this increased investment are considerable. The California Film Commission, the state agency tasked with overseeing the tax credit program, has offered optimistic projections regarding its impact on employment within the sector. The commission estimates that the expanded program could lead to a substantial increase in industry employment, projecting growth of 40–50%.
In absolute terms, this percentage translates to an anticipated increase of between 4,400 and 5,500 jobs. These figures highlight the program’s potential not only to stabilize the existing workforce but also to foster significant new job creation across various segments of the production industry, from crew positions to post-production services.
Modernizing and Expanding Program Eligibility
In parallel with the funding increase, legislators are also advancing companion legislation designed to modernize and strengthen the incentive program. This effort is embodied in Assembly Bill 1138 (AB 1138), co-authored by Assemblymember Zbur and Senator Ben Allen. AB 1138 aims to refine the program’s structure and broaden its accessibility.
A key provision of AB 1138 is the expansion of eligibility criteria, allowing a wider range of projects to qualify for the tax credits. The bill also proposes to increase the base tax credit rate significantly, raising it from the current 20% to 35%. This higher base rate is intended to make California more competitive with incentives offered by other states and countries.
Furthermore, AB 1138 includes an additional incentive tier for productions filming outside of Los Angeles County. These projects could see their tax credit potentially rise to 40%, a measure designed to encourage production activity and its associated economic benefits in other regions of the state.
Broadening Content Types and Promoting Diversity
The proposed changes in AB 1138 also address the evolving landscape of media production. The bill specifically expands the program’s scope to include content types previously less emphasized or ineligible, such as sitcoms, animation, and large-scale competition shows. This expansion aims to diversify the types of productions benefiting from the program, reflecting the breadth of the modern entertainment industry.
In a move aimed at fostering workforce development and diversity, AB 1138 also incorporates a new 2% bonus tax credit. This bonus is specifically for productions that employ 1–4 trainees sourced from job programs focused on historically underrepresented populations. This provision seeks to create pathways into the industry for individuals who may face systemic barriers to entry, promoting a more inclusive production environment.
Conclusion
The agreement reached by California lawmakers to significantly increase the film and television tax credit program to $750 million, coupled with the modernization efforts outlined in AB 1138, signals a strong legislative commitment to the future of the state’s signature industry. With a critical vote looming on Friday, June 28, 2025, stakeholders are closely watching to see if these proposed changes will successfully revitalize production, stimulate job growth, and ensure California remains a global leader in entertainment production.
