California Introduces Last-Minute Bill to Salvage Hollywood Tax Credits Before Session Ends

Key points

• Assemblymember Rick Chavez Zbur and Senator Ben Allen introduced AB/SB 186 on Friday to address concerns over California's $750 million film and television tax credit program.
• The bill proposes exempting independent productions from new business tax credit caps and allowing productions to monetize 95% of their refunds within two years, up from 90% over five years.
• The legislation follows a June 29 budget bill that extended temporary caps on business tax credits over $5 million annually, which stakeholders argue jeopardizes the viability of the 2025 tax credit expansion.
• The Motion Picture Association, Entertainment Union Coalition, and Producers Guild of America support the new bill, which was introduced after a lobbying campaign that generated 350,000 letters from industry members.
• Legislators must pass the bill before the session adjourns on August 31, though some stakeholders remain concerned that the sudden changes may deter companies seeking long-term stability in production planning.

Background

California's film and television tax credit program has faced significant challenges in recent years, with productions relocating to cheaper hubs like Canada, Georgia, the U.K., and Ireland due to higher costs and bureaucratic permitting in Los Angeles. This trend, accelerated by the pandemic and industry strikes, has led to job losses and the closure of many studios and post-production firms. While expanded incentives introduced in 2024–25 have shown some signs of revival, the industry's center of gravity continues to shift away from California. Recent efforts, including a push for a federal film tax credit and a state post-production tax credit, have aimed to address these issues, but the new trailer bill represents a last-minute attempt to mitigate the impact of recent budget changes on the state's film incentives.

Why it matters

The stability of California's film and television tax credit program is crucial for retaining jobs and maintaining the state's status as a global entertainment hub. The new trailer bill, if passed, could help mitigate the impact of recent budget changes on the industry, but it may not fully restore confidence in the stability of state incentives. The outcome of this legislation could have significant implications for the future of film and television production in California, as well as the broader entertainment industry.

What to watch

Legislators must pass AB/SB 186 before the session adjourns on August 31. If the bill is passed, it will exempt independent productions from new business tax credit caps and allow faster monetization of refunds. If the bill is not passed, the impact of the June 29 budget bill on the film and television tax credit program will remain in effect, potentially leading to further job losses and production relocations. The outcome of this legislation will also influence future efforts to address the stability of California's film incentives, including potential federal tax credits and state post-production tax credits.