Hollywood Warns California Against Sabotaging Film Incentives

Key Points:

• The California entertainment industry is warning Gov. Gavin Newsom that proposed limits on corporate tax credits could harm film and TV production, risking tens of thousands of middle-class jobs and undermining the state's film incentive program.
• Newsom's budget proposal would cap tax credit utilization at 50% of a company's tax liability or $5 million, aiming to stabilize the state budget and address a structural deficit, but industry groups argue this will deter production in California.
• The coalition, including the Motion Picture Association and Hollywood unions, is pushing for film tax credits to be exempt from these new limitations, citing that producers base location decisions on the ability to fully realize incentives.
• The Department of Finance maintains that the 70% credit limit starting in 2030 is a balanced approach that preserves incentives while ensuring minimum tax payments, but industry groups warn it will reduce the value and liquidity of film credits, especially affecting independent producers.
• The letter also highlights concerns about pre-2025 non-refundable film credits potentially expiring under the new rules and urges making these credits refundable or transferable to protect ongoing production financing.