California Gov. Gavin Newsom is seeking another major expansion of the state’s film and television tax incentives, proposing at least $1 billion annually to attract productions, protect entertainment jobs and compete with lucrative incentives offered elsewhere.
By yourNEWS Media Newsroom
HOLLYWOOD, Calif. — California Gov. Gavin Newsom announced Monday, Nov. 2, a proposal to increase the state’s annual film and television tax credit program from $750 million to at least $1 billion, a significant expansion intended to reverse years of declining production activity and keep entertainment industry jobs in California.
The proposal would provide additional incentives for major studios, independent filmmakers, actors and production companies while extending the program through 2040. Newsom also renewed his call for Congress to establish a nationwide film and television tax credit to help American productions compete with foreign filming destinations.
The governor’s announcement comes just over a year after California more than doubled its annual film tax credit allocation from $330 million to $750 million, an expansion aimed at addressing the movement of entertainment production to other states and countries.
Under the new proposal announced by Newsom’s office, California would maintain what the administration describes as the nation’s largest capped film and television tax credit program.
“California created the modern entertainment industry; we’re the capital of entertainment and we’re going to keep it here,” Newsom said.
“At least $1 billion in tax credits means more investment flowing into our economy and more opportunity across the industry. Through this expansion, we will maintain the momentum and success of our historic expansion last year.”
The governor also called for federal assistance, arguing that competition for film and television projects has become too costly for individual states to address alone.
“But states can’t shoulder the cost alone, which is why I am calling on Congress to back up an expanded tax credit by passing national film and TV tax credit legislation already on the table,” Newsom said.
The proposed increase would add at least $250 million annually to the existing state program, representing an increase of approximately one-third.
A central component would expand eligible production expenses to include certain payments to leading actors, directors, producers and other creative professionals, known in the entertainment industry as above-the-line talent.
California’s existing incentives have generally focused on qualified production expenditures, including wages for crews and other costs associated with filming in the state.
Allowing additional above-the-line expenses to qualify could make the program more attractive to major productions with substantial talent budgets.
The proposal would also raise annual funding for independent film productions to $100 million, an increase of $26 million over the current allocation.
Independent filmmakers often face financing challenges and may have fewer opportunities to relocate productions than major studios with extensive international operations.
Newsom’s administration argues that additional funding could support smaller projects while broadening the economic benefits of the program.
Another provision would establish a 5% additional tax credit incentive for companies that commit to filming at least two separate qualifying productions in California.
The administration said the incentive is intended to encourage studios and production companies to make longer-term investments rather than selecting filming locations on a project-by-project basis.
The proposal would also extend the tax credit program’s expiration date to 2040, providing companies with greater certainty when planning multiyear television series and other productions.
The changes would require legislative approval and have not yet been enacted.
Newsom’s office emphasized that California has already experienced increased production activity following the program’s expansion in 2025.
According to figures released by the administration, applications for film and television tax credits increased 82% compared with the previous year.
The state reported $8.25 billion in direct production spending associated with the expanded program, including $5.3 billion in qualified expenditures and $3.2 billion in qualified wages.
The administration also reported more than 43,000 cast and crew jobs associated with participating productions.
Film shooting days increased 52% year over year among projects covered by the program, while television shooting days increased more than 7%, according to the state’s figures.
Officials reported more than 8,600 filming days, including 1,823 days outside the traditional Los Angeles production zone.
The administration said those out-of-zone productions help distribute economic activity across other California communities.
However, the reported growth among tax-credit-supported productions does not necessarily mean that overall filming activity throughout California has increased.
Industrywide production has continued facing difficulties despite the expansion.
According to Screen Daily’s Nov. 2 coverage, FilmLA reported a 4.8% year-over-year decline in regional shooting days during the third quarter of 2026.
The decline illustrates the continuing challenges confronting California’s entertainment industry, including competition from filming destinations offering generous financial incentives.
Georgia, New York, New Jersey and other states have expanded or maintained substantial production tax credits to attract studios and television networks.
Canada, the United Kingdom and several European countries also offer financial incentives that can make overseas filming less expensive than production in California.
Those programs have contributed to a global competition for production spending, employment and studio investment.
California remains home to major entertainment companies, soundstages, post-production facilities and a large concentration of experienced industry workers.
Nevertheless, productions frequently choose alternative locations because of lower labor expenses, tax incentives, permitting arrangements or other cost considerations.
Film and television unions have warned that reduced filming activity can create financial difficulties for workers who depend on consistent production schedules.
The effects extend beyond actors and directors to camera operators, electricians, set designers, costume professionals, drivers, caterers, equipment suppliers and local businesses.
Newsom’s administration maintains that retaining production spending generates economic activity throughout those supporting industries.
Dee Dee Myers, senior adviser to the governor and director of the Governor’s Office of Business and Economic Development, said the proposed expansion would strengthen the state’s ability to attract investment.
“A $1 billion California Film and TV Tax Credit would strengthen California’s creative industries, support more good-paying jobs, and keep our entertainment economy growing,” Myers said.
“Expanding the credit would also make California more competitive for the productions, talent, and investment that drive this industry.”
California Film Commission Director Colleen Bell also endorsed the proposal.
“I’m grateful for Governor Newsom’s leadership and his call to expand California’s Film and TV Tax Credit to over $1 billion,” Bell said.
“The California Film and TV Tax Credit has become one of our most important tools to increase production in California, support crews and strengthen the creative economy that makes this state the entertainment capital of the world.”
The film commission administers the state’s tax credit program, reviewing applications and determining which productions qualify for financial incentives.
Productions generally must satisfy eligibility requirements involving filming activity and qualified expenditures.
Tax credits are awarded under the applicable program rules rather than automatically provided to every project filmed in California.
State officials say the program has generated more than $35.4 billion in economic activity since its establishment in 2009 and supported more than 248,000 cast and crew jobs.
The administration also cites estimates that each dollar of tax credits awarded has been associated with $24.40 in economic output, $16.14 in gross domestic product and $8.60 in wages.
Those figures are presented by the state as measures of economic activity associated with the program. They are not equivalent to direct net tax revenue returned to the state treasury, and they do not by themselves establish whether the incentives fully pay for themselves.
The cost-effectiveness of film tax credits remains a subject of debate among economists and state budget analysts.
Supporters argue that incentives attract projects that might otherwise be filmed elsewhere, supporting employment and related businesses.
Critics question whether governments recover enough tax revenue to justify the credits and whether some productions would remain in their established locations without additional subsidies.
Because film and television production is highly mobile, evaluating the programs requires distinguishing economic activity that incentives actually attract from activity that would have occurred regardless.
The proposed expansion also comes amid California’s broader budget pressures and competing demands for state resources.
Increasing annual tax credits would reduce potential state tax collections or create additional fiscal costs, depending on how the credits are structured and redeemed.
Lawmakers would need to weigh those costs against projected employment, spending and industry development.
Assemblymember Rick Chavez Zbur, D-Hollywood, supported the proposal and credited the 2025 expansion with encouraging additional production activity.
“Our work last year to expand California’s Film and Television Tax Credit Program to $750 million annually and modernize the program is delivering results, bringing back tens of thousands of jobs in its first year,” Zbur said.
“While we’ve made tremendous progress, we must continue building on that momentum to ensure California remains the film and television capital of the world.”
The new proposal follows additional entertainment industry legislation Newsom signed in September.
Those measures included the creation of a separate tax credit supporting post-production work such as editing, sound, music and visual effects.
The governor also approved changes intended to make certain existing credits more valuable and provide additional support for independent films.
According to the Sept. 19 announcement from the governor’s office, the legislation was designed to encourage companies to retain post-production work in California rather than relocating those services to lower-cost regions.
The administration has also supported measures addressing artificial intelligence in entertainment, including requirements involving AI-generated performers in advertisements and protections for actors’ digital likenesses.
Those initiatives reflect the growing importance of digital production technologies to California’s entertainment economy.
Beyond state incentives, Newsom is urging Congress to approve the Motion Picture, Television, and Entertainment Revitalization Act.
The bipartisan legislation, introduced in September by Democratic Sen. Adam Schiff of California and Republican Sen. Tim Scott of South Carolina, along with House lawmakers, would establish a federal tax credit for qualifying domestic film and television productions.
The proposal would create a base 20% federal tax credit for eligible production spending, potentially allowing companies to combine federal assistance with applicable state incentives.
According to the California Film Commission’s description of the federal proposal, the legislation is intended to encourage productions to remain in the United States instead of moving overseas.
Newsom renewed his request Monday for Congress to pass the measure before the end of 2026.
A federal incentive could change the competitive environment for American film production by providing support nationwide while allowing states to maintain their own programs.
However, the proposal would also carry federal budget costs and require congressional approval.
The governor’s announcement arrives one day before California voters select his successor in the Nov. 3 gubernatorial election.
Newsom is barred from seeking another consecutive term under California’s term-limit rules.
Because the proposed expansion has not been enacted, its future will depend on the state Legislature and the incoming administration.
That uncertainty makes the proposed extension through 2040 particularly significant for entertainment companies seeking predictable incentives for long-term investment.
California’s film and television industry has undergone considerable change in recent years, including disruptions associated with the COVID-19 pandemic, labor strikes, streaming industry restructuring and competition from international production hubs.
Those developments have affected employment and production schedules throughout Southern California.
State officials argue that increased incentives can help address the migration of work, although broader industry conditions will continue influencing where studios choose to film.
The proposed $1 billion allocation would represent another substantial increase in California’s financial commitment to preserving its entertainment industry.
Whether it produces lasting growth will depend on legislative approval, the competitiveness of other production locations and the extent to which additional incentives influence companies’ decisions.
For now, Newsom’s announcement establishes a new policy objective rather than an immediate increase in available tax credits.
The existing $750 million annual program remains in effect while lawmakers consider whether to expand it to at least $1 billion and extend its authorization through 2040.
Original article
Comments