California Increases Film and TV Tax Credit Cap to $750 Million

News Summary

California has raised its film and television tax credit cap from $330 million to $750 million in response to competition from other production hubs. Governor Gavin Newsom supports this move, which aims to retain Hollywood productions and create job stability in the state. The new tax structure enhances incentives for projects in Greater Los Angeles and aims to generate over $664 million in economic impact. Local government efforts are also underway to streamline the permitting process for filming, providing further support to the industry amid challenges from the pandemic and labor strikes.

California has officially expanded its film and television tax credit cap from $330 million to $750 million. This significant increase, approved by the state legislature, aims to provide new financial incentives to retain Hollywood productions within the state, which has seen a decline in film and television shoots in recent years. The application window for the next round of tax credits is set to open on July 7.

Governor Gavin Newsom, who championed the bill, expressed that the move is essential for California to remain competitive against other production hubs that have been attracting filmmakers with generous tax incentives. Some of the regions that California is competing against include Toronto, Vancouver, New Zealand, the United Kingdom, Georgia, and Louisiana. This strategy comes at a crucial time when many productions have been leaving the state, resulting in substantial job losses for workers in the industry.

Notable industry projects that are expected to benefit from the expanded credit include Hulu’s Paradise, CBS’s NCIS: Origins, and Prime Video’s Mr. & Mrs. Smith. The new tax structure increases the incentive for productions shot in the Greater Los Angeles area, raising the percentage from between 20% to 25% to as much as 35%. Meanwhile, productions located outside the Greater Los Angeles area may be eligible for a tax credit cap reaching up to 40%.

Assemblymember Rick Chavez Zbur expressed that the initiative would bring much-needed stability and support to workers across California’s film and television sectors. The expansion is expected to have a significant economic impact, potentially generating an estimated $664 million in total spending across the state, which includes over $302 million in wages for industry workers.

Furthermore, Mayor Karen Bass has emphasized the need for local government to assist in facilitating smoother permitting processes for film and TV projects within Los Angeles. There has been a noted decline in shoot days in the area, largely attributed to bureaucratic red tape in permitting and insufficient incentives for production companies. In response, Bass announced her directives in May for streamlining the filming permit process, aiming to make filming easier and more cost-effective while reducing obstacles for productions.

The California Film Commission has announced its intent to integrate the expanded funding into upcoming application cycles, with scheduled application openings in July for TV productions and August for film projects. This escalation in the tax credit cap places California at a competitive advantage over states like New Jersey, New Mexico, and Louisiana, although it still operates below New York and states like Georgia, which have no maximum tax credit limit.

Industry representatives have lobbied for the tax credit expansion, deeming it vital for reviving the state’s production economy. This initiative is particularly relevant as the film and television industry continues to rebuild from setbacks caused by the pandemic, labor strikes, and increased competition from other states. As part of efforts to further enhance California’s attractiveness for filming, a second bill is also in the pipeline that aims to modernize the tax credit program.

As the industry looks ahead, the expansion of the tax credit program is poised to play a crucial role in returning production work to the Golden State and supporting a vibrant ecosystem of talent and creativity in the film and television arena.

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