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As California looks towards recovery from its recent wildfire crisis and seeks to address the lag in location filming within the state, we could be looking at even more measures to revitalize and modernize the existing Film and TV Tax Credit Program in tandem with the expansion recently proposed by State Governor Gavin Newsom. To fill us in on the details, we have entertainment lawyer from Blake & Wang P.A., Brandon Blake, with everything you need to know.

Brandon Blake

“Money Alone May Not Be Enough”— New Plans Tabled

While Gov. Newsom’s plan to expand the state’s Film and Television Tax Credit Program has been well-received overall, the California Legislature recently recognized that reinventing the state as an attractive location destination for filming may need more than just a compelling tax incentive to help. Two new bills have been tabled, sponsored by State Senator Ben Allen and Assembly Members Isaac Bryan and Rick Chavez Zbur proposing additional amendments and updates. The proposed increase from $330M a year to $750M annually for the tax credit scheme remains in place.

Meeting Demand More Efficiently

State Senator Ben Allen noted that as much as 77% of the projects that do not get the green light on tax credits in California inevitably move on to other tax-friendly filming destinations. However, he was quick to highlight that this shows they are placing California at the top of their destination lists until they are rejected. He suggests this could be losing the state up to $1B in production spending, and the concurrent loss of income and local economic gains that comes with it.

We are still waiting for full details on what exactly is planned for both bills. However, they seek to improve the effective rate of local programs to bring them more into line with the countries and states who are benefiting from that flight from California.

Naturally, Governor Newsom’s proposed expansion to the overall tax credit program has taken something of a back seat to the wildfire recovery efforts in the state, so it is not yet firmly set and will not be until California's 2025-2026 budget is fully finalized. However, the proposition has met with praise across the board, and it is highly likely we will see it approved. Especially given that the entertainment industry has massive economic potential for the state.

Will it be enough, however, to restore some of the plummeting production levels California has seen in recent years, particularly in the Los Angeles area? After all, Utah, New Jersey, and Nevada have also recently expanded their tax credit options, and New York has nearly doubled its offering. There are also states and countries that do not cap their subsidies at all.

However, it’s certainly encouraging to see even more efforts being made to revitalize the entertainment industry in California, and we can be hopeful that the new bills will help to further reinvent the home of Hollywood as a prime shooting location once again.