/>iHighlights
- California is revamping their Film and Television Tax Credit Program to better compete with other domestic and international production incentive programs.
- The annual cap on available tax credits more than doubled, with an increase from $330 million to $750 million.
- A supplemental bill passed by the California Legislature expands the types of eligible productions and increases the qualified expenses per project.
- California’s Tax Credit Program 4.0 officially opened for applications dated after July 1, 2025.
- Despite the program’s expansion, California still trails key competitors like Georgia and recently expanded programs in New York and New Jersey.
Expansion of the Production Incentive Program
California has recently taken major steps to reinvigorate its film and television industry through an ambitious expansion of its tax credit program. The changes aim to bring productions and jobs back to the state, which once stood as the undisputed center of global production but has more recently suffered from the lingering effects of unprecedented twin labor strikes, natural disasters and a stagnant economy.
On June 27, 2025, the California legislature approved an increase in the annual cap to the Film & TV Tax Credit program from $330 million to $750 million. Governor Gavin Newsom signed the measure into law on July 2, 2025, and 16 new television productions immediately qualified for tax incentives under this new cap. The Governor’s office estimates these new productions will bring in 6,700 jobs for cast and crew and $1.1 billion in total spending.
One day later, the California Legislature approved, and Governor Newsom enacted, a supplemental expansion of the program in the form of AB 1138. The expansion allows for writing off up to 35-40% of qualified expenditures per production, up from the previous 20-25%. The bill also doubles the cap for independent film production tax credits and adds new eligible programming categories, including animated films, live-action or animated television programs with a running time of at least twenty (20) minutes and with a budget over $1 million per episode, and large-scale competition television programs exceeding the same threshold.
Coupled with the expansion of the cap, and AB 1138, the California Film and Television Tax Credit Program 4.0 now allows for all tax credits to be fully refundable.
California vs. Other Jurisdictions
While California’s updates mark a significant policy shift, the state still faces steep competition with other big production markets.
Georgia, for instance, does not have a limit on the amount of tax credits they can provide for film and television productions. While the state offers a maximum production incentive of 30% of qualified expenditures per production, now less than California, they provide a greater number of projects with a transferable tax credit, which is sold to other taxpayers, and offers more creditable expenditures than the California program.
New York and New Jersey have also recently revamped their tax credit programs in an effort to draw more production to their respective states.
Productions that shoot in certain European countries like the United Kingdom and Hungary can take advantage of both national and local tax credit programs. Receiving tax credits from multiple programs allows for a significant amount of production expenses to be written off per production.
Governor Newsom has reportedly engaged with the current administration to advocate for a national production incentive program — an effort to make the U.S. more competitive on the global stage.
Despite lingering disadvantages, California hopes that the ease of working in-state — close to major studios, infrastructure and talent — combined with its expanded incentives, will help assert its place as the industry’s production hub of choice.
