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Tom is a filmmaker, producer, and marketing specialist based in Los Angeles.
At Wrapbook, we pride ourselves on providing outstanding free resources to producers and their crews, but this post is for informational purposes only as of the date above. The content on our website is not intended to provide and should not be relied on for legal, accounting, or tax advice. You should consult with your own legal, accounting, or tax advisors to determine how this general information may apply to your specific circumstances.
California's allure goes beyond its iconic landmarks and perfect weather. The state’s robust support for the arts, coupled with comprehensive incentives, creates an environment where film and television productions can thrive.
From the rugged cliffs of the Pacific Coast to the star-studded streets of Hollywood, California offers unmatched diversity for any script and setting.
California introduced film tax incentives to combat "runaway production" to other states and countries that began offering more competitive incentives in the 1990s.
Recognizing the vital role that filmmaking plays in the state’s economy, California crafted incentives that have evolved over the years to remain attractive and beneficial, ensuring the film industry’s growth and sustainability within the state.
While California currently administers its tax credit under the California Tax Credit Program 3.0, beginning in 2025 the Golden State will update the program to the California Tax Credit Program 4.0, and offer more competitive incentives under this new program.
Below, we’ll cover both what the current 3.0 program offers in the way of tax credits and what will be new in the 4.0 program.
California’s Tax Credit Program 3.0 offers a 20%–30% tax credit for qualifying productions. Depending on what type of project you’ll be filming in the Golden State, the type of tax credit differs.
For example, feature films, new TV series, mini-series, and TV pilots all qualify for a 20% base non-refundable, non-transferable tax credit and relocating TV series qualify for a 25% base non-refundable, non-transferable tax credit.
Non-refundable tax credit means that the state of California will offset your in-state tax liability with the tax credit amount for which you qualify. If your tax credit is larger than your tax liability, you will not receive any of the credit money in excess of the tax liability.
Non-refundable tax credits are particularly unattractive to out-of-state production companies who often have little to no tax liability in the state.
Non-transferable tax credits cannot be resold; they must be used by the production company to whom they were awarded.
Independent films can qualify for a 25% transferable tax credit. Because the credit is transferable, that means if you don’t owe enough state taxes to use the entire credit, you can sell your credit to another business entity that does have tax liability in California.
The 3.0 program provides additional bonuses ranging from 5%–10% for specific qualifying activities like filming outside the Los Angeles zone, qualifying visual effects spend, or utilizing local labor.
Beginning on July 1, 2025, California will begin offering an updated, more competitive version of its current film tax credit known as the California Film and Television Tax Credit Program 4.0.
Program 4.0, set to through 2030, allocates $330 million in funding per year like Program 3.0 but also introduces significant changes that make the credits refundable for both independent and non-independent projects.
This means if the credit amount exceeds the tax liability of the recipient, the excess can be refunded. This change is aimed at broadening the range of productions that can benefit from the program, thus enhancing its economic impact across more projects and potentially attracting a wider array of media productions to California.
You can learn more about Program 4.0 here.
Eligible projects include:
Separate specific incentives are available for:
The program targets both large and small productions, ensuring a broad spectrum of films and series benefit from the incentives.
Everything from cast and crew payroll to physical production expenses like equipment rentals and property used or obtained in California can all be covered by California film tax credits.
When considering what expenses will qualify for a California film tax credit, it’s useful to think of your production costs falling into one of three categories.
Payments to cast and crew are eligible for California film tax credits with certain caps and requirements based on their roles and residency status.
Currently under Program 3.0, only below-the-line crew are eligible for a tax credit on payroll, and both below-the-line residents and below-the-line nonresidents can qualify for a 20%–30% tax credit, depending on if they are eligible for additional bonuses like the out-of-zone bonus or local hire bonus.
Importantly, there is no compensation cap, meaning that 20%–30% of all below-the-line crew payroll can qualify for a tax credit.
Along with cast and crew payroll expenses, California offers a tax credit of 20%–25% for physical production expenses.
This means production expenses including set construction, location fees, and certain post-production expenses qualify for the 20%–25% credit, which the State of California hopes will encourage productions to utilize local resources.
Of course, given that all these tax credits have a specified range and not a discrete percentage, you might be asking how your next production can qualify for the upper end of the range—that is, how can you see a 25% credit on production spend versus 20%?
The answer is California’s uplift bonuses. Eligible projects can snag an extra 5% or 10% credit on a few special expenses:
When you shoot original scenes beyond the 30-mile studio zone—from pre-production to strike—every dollar counts. Productions incurring expenses 30 miles outside of Los Angeles and beyond are eligible for a 5% credit on those expenses.
Qualifying expenses here include wages for work outside the 30-mile zone and costs for gear purchased or rented and used out-of-zone, too.
Certain visual effects work can also qualify for an additional 5% bonus.
For VFX to qualify, they need to comprise at least 75% of your VFX budget, or your total VFX spend in California must hit at least $10 million.
If you’re working on a non-independent project (relocating TV shows aside), there’s a bonus 10% tax credit on the table for hiring local crew. Independent films and TV series on the move can earn an extra 5% for employing local talent.
Filmmakers must meet rigorous criteria, including the current minimum spend threshold of $1,000,000.
A detailed audit and submission of production details are required to ensure compliance with the state’s guidelines.
For more on the current requirements of the California Film Tax Credit Program 3.0, you can visit the program’s website.
Applications are accepted during specific periods each fiscal year, with varying dates for different types of projects. It’s crucial to stay updated on these windows by regularly checking the California film tax credit program website.
The application process involves detailed documentation, including a jobs ratio calculation that assesses the economic impact of your project based on several factors like local hiring and spending.
All applications can be made through the California film tax credit program website.
Specifics, including guidelines and checklists for the California film tax credit application can also be found here:
The most unique component of the application is something called the jobs ratio.
The jobs ratio is basically a scale that weighs how much economic impact your particular project will have on the state. Things like resident hires, location, out-of-zone hires, and your VFX cost can impact your final jobs ratio.
The California Film Commission will take a percentage of applicants with the highest jobs ratio from any given application window and, depending on other requirements, admit those applicants into the program.
Given the weight the Commission gives to the jobs ratio, it can be tempting to inflate your numbers when calculating. You should be very careful to avoid this.
The State carefully looks at calculations to ensure their accuracy. If your numbers do not line up with what you actually spend and produce in the state, the Commission may reduce your returning credit after completing their final audit.
In all cases, you will be required to tag and track your production budget, submit your screenplay and proof of financing, and write a detailed narrative statement for your California tax credit application.
Wrapbook VP of Sales and Production Incentives Ryan Broussard recently guested on the podcast AirTalk to discuss the general landscape of state film tax incentives and specifically California's competitive position in it. Joining Broussard was Colleen Bell, Executive Director of the California Film Commission. To hear firsthand what these experts in California film tax credits had to say, be sure to check out AirTalk!
Utilizing a California film tax credit can be an excellent way to offset the cost of your film. While the process may be selective, once you’ve been awarded a tax credit, you can write-off expenses responsibly and save cold hard cash.
If filming on the East Coast is more your thing, discover how to tackle the same process for attaining New York film tax credits. Or check out our brand new Production Incentive Center, full of useful tools for comparing and finding production incentives.
Welcome to the bustling, innovative heart of the film industry—California. With its diverse landscapes and historic connection to cinema, California remains a top destination for filmmakers from across the globe.
But it’s not just the scenery or heritage that draws productions; California’s enticing film tax credits play a huge role, too.
In this guide, we’ll explore how to leverage California film tax credits to make your next project financially feasible and creatively outstanding. We’ll walk through the ins and outs of the California film tax credit program including what it is, how to apply, and how a California film tax credit can help your next production save some serious change.
Before diving deep into the world of California film tax credits, we invite you to explore Wrapbook's Production Incentive Center. This tool offers a wealth of information on film tax incentives across the U.S. with detailed insights into California's offerings.
Wrapbook’s Production Incentive Center features tools like the State Incentive Map, which allows you to easily navigate incentive options across the country.
The Incentive Comparison Tool can help you discover how film tax incentives in different states stack up against each other.
You can even talk to an AI Incentives Expert to learn about the latest legislation and to get a clear, concise explanation of how to make incentives work for you.
The Production Incentive Center is an invaluable resource to help you make informed decisions about where to locate your production.
