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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.
In a bold move to bolster California’s entertainment industry, Governor Gavin Newsom has proposed a significant expansion of the state’s Film and Television Tax Credit Program.
The proposal aims to increase the California film tax credit program’s annual cap from $330 million to a whopping $750 million, a strategic effort to attract production back to Hollywood amid growing competition from other states and countries.
Though the funding expansion is not yet official—it must first be approved by the California State Legislature in early 2025—Newsom’s announcement is an encouraging step forward for a flagging entertainment industry.
As the industry grapples with recovery from recent strikes and an exodus of productions, this proposal could be a game changer for filmmakers, crew members, and the broader California economy.
Governor Newsom's proposal seeks to more than double the current funding available for film and television production incentives from $330 million to $750 million.
If approved by the state legislature, this expansion would reposition California as a production incentive leader with annual funding surpassing that of other top states like New York.
The proposed $750 million annual cap is intended to address the oversubscription of the existing program, which has left many productions without the support they need to film in the state.
Seventy-one percent of projects that fail to secure California tax credits opt to shoot elsewhere, suggesting the state is losing out on significant revenue as productions increasingly look to boost their budgets outside of Hollywood.
With more funding, the California Film Commission could allocate more film tax credits and prevent this trend of “runaway production.”
If approved by the California State Legislature in early 2025, the film tax credit funding increase would go into effect in July 2025.
The expansion would then coincide with the California film tax credit program’s upcoming transition from Program 3.0 to a new and improved Program 4.0 set to launch on July 1, 2025.
Notably, Program 4.0 will introduce refundable tax credits, allowing production companies to receive refunds for credit amounts that exceed their tax liability.
Additionally, in 2023 Governor Newsom signed a five-year extension of the state’s film tax credit program while approving new workforce diversity provisions, more funding for the Pilot Career Pathways Training Program, and an industry-first Safety on Production Pilot Program.
Taken together, the funding increase and Program 4.0 updates aim to broaden the range of productions benefiting from the program and enhance the overall economic impact of California film tax credits.
By increasing funding without altering the core structure of the program, the expectation is that more productions will find California's tax incentives accessible and beneficial.
The proposed increase in tax credits is expected to provide a substantial boost to California’s film and television industry, which has faced significant challenges in recent years. With production spending in California declining by an estimated $1.6 billion from 2020 to 2024 due to limited tax credit funding and increased competition, the urgency for reform is palpable.
Recent analysis suggests the economic benefits of the Golden State’s film tax credit program are multifold. According to the data, each dollar in approved tax credits generates at least $24.40 in output, $16.14 in state GDP, and $8.60 in wages.
Furthermore, since launching in 2009, California’s Film & Television Tax Credit Program has generated over $26 billion in economic activity and supported more than 197,000 jobs for California cast and crew.
It’s no surprise, then, that the entertainment industry has largely welcomed Newsom’s proposal to add an additional $420 million in funding to the program, viewing the expansion as a crucial step towards revitalizing local production and restoring jobs in the sector.
Labor leaders have expressed optimism that the expanded tax credits will lead to greater employment opportunities for crew members and support ancillary businesses dependent on the entertainment industry.
The proposed expansion requires legislative approval, which will be a focal point in California’s 2025–2026 budget negotiations beginning in January 2025.
While Newsom’s proposal has garnered significant support, it may face scrutiny over its fiscal impact. Critics might question the allocation of such substantial funds to the entertainment industry, especially in light of other pressing state needs. Proponents, however, argue that the economic benefits and job creation potential far outweigh the costs.
If approved, the new cap could take effect as soon as July 2025, setting the stage for California to reclaim its status as the entertainment capital of the world. This proposal not only underscores the state’s commitment to supporting its film and television sector but also signals a strategic response to the challenges posed by runaway production.
Governor Newsom’s proposal to expand California’s Film and Television Tax Credit Program by increasing its annual funding to $750 million represents a significant step toward rejuvenating an industry that is essential to the state’s economy and cultural identity.
As the proposal moves through the legislative process, the hopes of thousands of industry professionals rest on the outcome. If successful, this initiative could revitalize local production, create jobs, and reaffirm California’s status as the go-to destination for filmmakers from around the globe.
With the stakes so high, all eyes will be on the legislative discussions ahead, eager to see how this historic proposal unfolds.
