California Awards $226M in Tax Credits to 35 Films, Led by Pixar and 'Michael 2'

Key points

• Pixar received the largest award of $40.1 million for an untitled animated feature.
• Lionsgate's 'Michael 2' secured $30.8 million, while Paramount's crime thriller received $29.3 million.
• The batch includes 28 independent films, with eight having budgets exceeding $10 million.
• New Line Cinema's 'Last Friday' sequel received $11.4 million, with Ice Cube citing local employment benefits.
• The credits are part of an expanded program that now includes a new post-production incentive.

Background

This latest round follows California's expansion of its film and television tax credit program, which raised the annual cap to $700 million. The state also recently launched a standalone post-production tax credit under AB 2319 to retain jobs in editing and visual effects. Since July 2025, 179 projects have generated $7.2 billion in production spending, supporting nearly 38,000 cast and crew jobs.

How outlets are covering it

The Hollywood Reporter emphasizes the dominance of animation in the credit program, noting that Pixar's award reflects the labor-intensive nature of animated productions. Deadline highlights the cultural legacy of franchises like 'Friday' and 'Michael,' while Variety focuses on the increased generosity of the credits, noting the rate rose from 17.5% to 35% for qualified costs. TheWrap points to the competitive pressure from other states, citing Skydance CEO David Ellison's comments that California's incentives lag behind New Jersey and Georgia, despite recent expansions.

Why it matters

The tax credits are critical for retaining production in California amid rising costs and competition from other states. The program aims to support both major studio projects and independent filmmakers, ensuring that local communities benefit from job creation and economic activity. The inclusion of a post-production credit is a strategic move to prevent the loss of technical jobs to other jurisdictions.

What to watch

Lionsgate's 'Michael 2' is targeting a production start in late 2026 or early 2027. The state will monitor the impact of the new post-production credit, which begins with a $10 million annual cap. Lawmakers are also considering further expansions to the incentive program to maintain California's competitiveness in the global film market.