California Increases Film and Television Tax Credits

A bustling film set in California, showcasing the vibrant film industry supported by increased tax credits.

News Summary

California has raised the annual film and television tax credit cap from $330 million to $750 million to bolster the local industry. This move, supported by Governor Gavin Newsom, aims to keep Hollywood productions in the state and enhance competitiveness against other regions. With new incentives set to boost filming in California, crucial projects like Hulu’s ‘Paradise’ and CBS’ ‘NCIS: Origins’ are expected to benefit. The change is hoped to generate significant economic contributions while addressing challenges such as permitting and talent cultivation.

California has approved an increase in the annual film and television tax credit cap from $330 million to $750 million. This legislative action, championed by Governor Gavin Newsom, is designed to enhance financial incentives for keeping Hollywood productions in the state and to rekindle the local film and television industry, which has seen significant declines in activity in recent years due to competition from other regions.

The tax credit expansion will take effect with the application window set to open on July 7, providing much-needed support to an industry that has faced challenges, including productions relocating to areas with more attractive tax incentives. The new plan aims to enhance California’s competitiveness against various global filming locations such as Toronto, Vancouver, New Zealand, the United Kingdom, Georgia, and Louisiana, which have lured productions away from California.

This shift in California’s tax policy comes after a troubling period for the local film industry, where many industry professionals found themselves without work due to fewer film and television projects being shot in the state. The expansion is expected to benefit numerous upcoming projects, including Hulu’s “Paradise,” CBS’ “NCIS: Origins,” and Prime Video’s “Mr. & Mrs. Smith.” The adjusted tax credit allows for an increased rebate percentage that ranges from 20%-25% to as much as 35% for productions filmed in the Greater Los Angeles area. Additionally, productions located outside this region can qualify for credits reaching up to 40%.

California Assemblymember Rick Chavez Zbur underscored the importance of this initiative as a means to offer stability to workers throughout the state. Mayor Karen Bass has recognized the critical role of local government in facilitating smoother permitting processes for film and television projects. Efforts are underway to make the filming experience more efficient and cost-effective, addressing bureaucratic barriers that have previously hampered production activities.

The decline in shoot days for film and television productions in Los Angeles has been attributed to various factors, including cumbersome permitting regulations and a lack of financial incentives. In response, Mayor Bass issued directives in May aimed at streamlining the filming permit process to help reverse these trends.

Noah Wyle, known for his role in “The Pitt,” highlighted the significance of cultivating local talent, which has a direct impact on production quality. The California Film Commission is poised to incorporate the expanded funding into upcoming application cycles, with provisions for scheduling in July and August for specific film applications.

The anticipated benefits of the expanded tax credit are substantial, with projections suggesting it could generate $664 million in total statewide spending, including over $302 million allocated to wages. Industry representatives have long lobbied for such an expansion, deeming it crucial for revitalizing the production economy in the wake of the pandemic, labor strikes, and competition from other states.

With this increase, California moves ahead of competitors such as New Jersey, New Mexico, and Louisiana in terms of tax credit offerings, although it still trails states like New York and those with no maximum tax credit allotment, such as Georgia. A second bill is also under consideration, aimed at modernizing the tax credit program further to enhance California’s filming competitiveness.