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

Key points

• The California Film Commission awarded $226.1 million in tax credits to 35 films, with 28 being independent productions.
• Pixar received the largest award of $40.1 million for an untitled animated feature, followed by Lionsgate's 'Michael 2' at $30.8 million.
• Paramount's untitled crime thriller received $29.3 million, while New Line Cinema's 'Last Friday' sequel received $11.4 million.
• The approved projects are expected to spend approximately $635.3 million in California across 1,049 shoot days, generating over $1 billion in total production spending.
• The credits support more than 5,400 cast and crew members and 24,800 background actors, with the state's tax credit rate now at 35% compared to 17.5% for the original 'Michael'.

Background

California recently expanded its film and television tax credit program, including the launch of a standalone post-production tax credit in September 2026. This move aims to retain jobs in editing, sound, and visual effects that had moved to other states or countries. The state's broader incentive program has been expanded to $750 million annually through 2030, with recent legislative changes allowing faster refunds and exemptions for independent productions.

How outlets are covering it

Variety emphasizes the financial impact of the 'Michael' sequel, noting it received $30.8 million in credits, a significant increase from the 17.5% rate applied to the original film. The Hollywood Reporter highlights the dominance of animated productions in the credit program, noting that Pixar's $40.1 million award reflects the labor-intensive nature of animation. The Los Angeles Times focuses on the broader economic impact, citing over $1 billion in direct production spending and thousands of jobs created. Deadline provides a comprehensive overview of the 35 films, including independent projects and major studio titles, and notes the state's efforts to retain production jobs amid industry contractions.

Why it matters

The approval of these tax credits underscores California's commitment to maintaining its status as a hub for film and television production. The expanded incentives aim to attract and retain productions, supporting local jobs and economic activity. The success of the 'Michael' sequel and other high-profile projects demonstrates the effectiveness of the state's tax credit program in attracting major productions.

What to watch

The approved films are expected to begin production in California, with 'Michael 2' targeting a start towards the end of 2026 or early 2027. The state's post-production tax credit, which started in January 2026, will continue to support jobs in editing, sound, and visual effects. The federal film tax credit, if passed by December 2026, could further incentivize productions to remain in the United States.