### Gov. Newsom Proposes Major Expansion to California's Film and TV Tax Credit Program

Governor Gavin Newsom announced a significant proposal on Sunday aimed at revitalizing California's film and television industry by increasing the state's annual film and TV tax credit program to $750 million, more than doubling the current allocation of $330 million. If approved by the Legislature, this increase could come into effect as early as July 2025, positioning California as the leader in capped film incentive programs, surpassing New York's $700 million cap.

"California is the entertainment capital of the world, rooted in decades of creativity, innovation, and unparalleled talent," Newsom stated. "Expanding this program will help keep production here at home, generate thousands of good-paying jobs, and strengthen the vital link between our communities and the state's iconic film and TV industry."

The proposal comes at a critical time as Hollywood faces several challenges in its efforts to recuperate from the pandemic and last year's dual strikes by writers and actors. Productions have increasingly moved to other states, incentivized by more attractive tax benefits, which has harmed California’s traditional stronghold on the film and TV industry. According to the governor's office, approximately 71% of projects that were turned down by California's tax credit program chose to film elsewhere.

California's film and TV tax credit program, originally established in 2009 with a $100 million annual cap, saw its limit increased to $330 million five years later. This program offers studios tax credits of up to 25% to offset film production costs including set construction and crew wages. However, some restrictions remain, such as the exclusion of salaries for actors and above-the-line costs, which other states like Georgia do not impose, putting California at a competitive disadvantage.

Although Newsom recently extended the current version of the program for another five years adding a "refundable" feature—allowing studios to receive cash payments from the state when their credits exceed their tax liabilities—his new proposal represents a substantial boost in funding. Yet, it does not address other existing restrictions within the incentive program. Critics argue these film incentives detract from other essential sectors like education and healthcare, making further enhancements politically challenging.

Industry professionals, such as the president of Santa Clarita Studios, Mike DeLorenzo, have voiced concern over California losing significant productions to states and countries offering more favorable tax credits. FilmLA, which handles film permits in the Los Angeles area, has also called upon state officials to increase the tax incentive program to combat the growing issue of runaway production and the subsequent job loss.

Current data underscores the urgency for such intervention. FilmLA reported that production levels in Greater Los Angeles dropped by 5% in the third quarter of 2024 compared to the same period in 2023, showcasing a troubling contraction in the industry.

Governor Newsom's ambitious plan aims to reverse this trend, promoting the return of film and TV productions to California and ensuring the state remains a vital player on the global entertainment stage.