Newsom Pushes for $1 Billion California Film Tax Credit Expansion Amid Industry Decline

Key points

• Newsom proposed increasing California’s film and TV tax credit from $750 million to at least $1 billion annually.
• The expanded program would cover above-the-line talent, including actors and directors, subject to funding caps.
• Independent film funding would increase to $100 million annually, up from $74 million.
• The tax credit sunset would be extended from five to 10 years, providing greater predictability for long-term production investment.
• Newsom called on Congress to pass the federal MPTERA, which would establish a 20% base tax credit for qualifying U.S. film, TV, and VFX projects.

Background

California’s film and TV tax credit was increased from $330 million to $750 million last year, but production levels in the state have continued to fall. The state’s production industry, centered in Los Angeles, has declined amid the rise of streaming, media consolidation, and the aftermath of the pandemic and labor strikes in 2023. Between 2022 and 2024, Los Angeles County lost more than 42,000 motion picture industry jobs. In September 2026, Newsom signed a $10 million post-production tax credit to combat Hollywood job loss, but the new proposal aims to address broader industry challenges.

How outlets are covering it

Variety, Deadline, Sacramento Bee, and Politico all reported on Newsom’s proposal, emphasizing the expansion of the tax credit to $1 billion and the inclusion of above-the-line talent. Deadline highlighted the political timing of the announcement, noting that Newsom’s term expires on January 4, 2027, and that the work of carrying through the proposal will fall to his successor, Xavier Becerra. Becerra has promised to enhance the existing tax credit but has been vague about specific enhancements. Politico noted that the proposal would bring California in line with states such as Georgia and Illinois, which have lured business away with lucrative incentive programs. Sacramento Bee emphasized the decline in California’s production industry and the need to compete with other states and countries. All sources agreed that the proposal aims to retain production jobs and attract more investment to California.

Why it matters

The proposal is significant because it addresses the ongoing decline in California’s film and TV industry, which has lost over 42,000 jobs in Los Angeles County between 2022 and 2024. By expanding the tax credit and covering above-the-line talent, Newsom aims to make California’s incentive program more competitive with other states and countries. The proposal also seeks to provide greater predictability for long-term production investment by extending the tax credit through 2040. If enacted, the expanded program could help retain production jobs and attract more investment to California, supporting the state’s economy and the entertainment industry.

What to watch

The proposal faces legislative hurdles before Newsom’s term ends in January 2027. Xavier Becerra, the Democratic nominee for governor, has promised to enhance the existing tax credit but has not committed to specific enhancements. Many industry stakeholders are pushing for an unlimited tax credit, but Becerra has not supported that. The federal MPTERA, which has bipartisan support, remains on the procedural back burner until after the midterms. If enacted, the expanded tax credit could help retain production jobs and attract more investment to California, but its success will depend on legislative action and federal support.