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California Gov. Gavin Newsom, on the eve of the 2026 midterm elections, is calling for another major expansion of the state’s film and TV tax credit program.
Newsom is proposing an increase to California’s entertainment
production incentive program from $750 million in annual tax credits to at least $1 billion, expanding what the governor’s office touts as already the largest capped film and TV tax credit in the U.S.
The proposed expansion, announced Monday, would include credits for above-the-line talent, to cover spending on actors’ salaries; $100 million earmarked for independent productions; rewards for companies that commit to more than one production in California; and an extension of the tax credit through 2040.
Newsom’s term expires on Jan. 4, 2027, so the work of carrying through on any such proposal will be left to his successor. Xavier Becerra, the Democratic nominee, has promised to enhance the existing tax credit but has been vague about what enhancements he would support. Many industry stakeholders are pushing for an unlimited tax credit, but Becerra has not committed to that.
At a hearing last week, as Assembly committee discussed measures including eliminating the $750 million cap, allowing above-the-line expenses, expanding eligibility, and extending the sunset date. The committee also heard testimony from union leaders and the Motion Picture Association, who argued that California must do more to make its incentive program competitive with other states.
In his statement, Newsom reiterated his call for Congress to pass the federal Motion Picture, Television, and Entertainment Revitalization Act (MPTERA) by the end of 2026. The legislation — which has bipartisan support — would establish a 20% base tax credit for qualifying film, television and VFX projects that are produced in the U.S.
California increased its film and TV tax credit from $330 million to $750 million last year — but production levels in the state have continued to fall. The hope is that the juiced-up $1 billion-plus incentives package will work to attract more productions (and therefore jobs) in the Golden State.
“California created the modern entertainment industry; we’re the capital of entertainment and we’re going to keep it here. At least $1 billion in tax credits means more investment flowing into our economy and more opportunity across the industry,” Newsom said in announcing the proposal. He added, “But states can’t shoulder the cost alone, which is why I am calling on Congress to back up an expanded tax credit by passing national film and TV tax credit legislation already on the table.”
Despite the overall decline of California productions in the past year, Newsom’s office said the $750 million tax credit has resulted in $8.24 billion in direct production spending to date, including $5.3 billion in qualified expenditures and $3.2 billion in qualified wages for more than 43,000 cast and crew jobs.
The governor’s proposed expanded program would:
- Increase in annual tax credit funding to over $1 billion
- Expand tax credit eligibility to above-the-line spending to “subject to appropriate funding caps”
- Extend the tax credit sunset from five to 10 years to “provide more predictability and support long-term production investment”
- Introduce an incentive for companies that commit to at least two distinct qualifying productions in California by providing a 5% boost in tax credits
- Increase independent film funding to $100 million annually, up $26 million from the current program
