California Hopes to Double Film and TV Tax Credits to Woo Back Production

California is set to double its film and TV tax credits to lure productions back to the entertainment industry capital of the world.

The Big Picture: Even though California is home to Hollywood, most movies and shows now shoot in locations with generous tax credits — Georgia, Louisiana, New York, the UK, Australia — as a way to get more bang for their budget. That’s displaced workers all over the world and cratered production in California.

Behind the Scenes: Tied with recent studio and streamer cost-cutting, California productions are reaching historic lows, forcing workers to relocate, change industries, or rely on welfare. That set off alarm bells within the offices of Hollywood unions, LA city hall, and, finally, Sacramento.

• Governor Newsom called for the state’s legislature to approve doubling the tax credit program from $330 million to $750 million annually, guaranteeing as much as $3.75 billion in tax credits over the next five years.
• There are different allocations to reward new productions, existing productions in the state, and productions relocating from other areas — covering up to 20% of a production’s budget.
• The credits would provide some relief for companies who choose to shoot in California despite higher labor costs and permitting fees (for example, the cost of an LA permit is exorbitant).
• But, unlike other places, California’s credit won’t be applicable to above-the-line costs (directors, writers, stars) or VFX.

Closing Credits: California has left a lot of money on the table by not staying competitive with its tax credits — it lost $1.6 billion from productions that applied for the credit but didn’t receive it because of how small the pool is. Most productions don’t even bother applying. By expanding the tax credits — which spurs a lot of economic activity and net-positive tax revenue — California, especially Los Angeles, could finally generate employment opportunities and reclaim its position as film and TV’s “company town” again.