🚨 It's a big week in California! Newsom's $750M Incentive Package Moving Forward.

Natalie Nelson

California lawmakers officially expand film & tv tax credit program to $750M – a major investment to keep cameras rolling in the Golden State.

California is making a monumental investment in its film and television industry, with lawmakers officially securing a substantial expansion of the state's Film & TV Tax Credit Program, aiming to keep cameras rolling and bring thousands of jobs back to the Golden State.

Assembly Bill 132, the tax trailer bill that includes the funding at $750 million per year for 5 years, was approved by the California Senate and Assembly, with a strong vote of 64-1 in the Assembly and 31-3 in the Senate and was signed by Governor Newsom on Friday, June 27th, ensuring this significant funding increase goes into effect on July 1, 2025, the start of the new fiscal year.

In a massive funding increase, the annual cap for the CA Film & TV Tax Credit Program has more than doubled, soaring from $330 million to $750 million. This positions California as one of the most generous states for capped film incentives, aiming to counter competition from uncapped programs like Georgia's, and the newly expanded New York program ($800 million annual cap).

Assembly Bill 1138, the companion bill to Assembly Bill 132, is expected to pass and take effect immediately before the July 4th holiday. Assembly Bill 1138 also includes significant improvements to the California Film & TV Tax Credit Program (summarized below). This swift implementation ensures the new program (dubbed "CA 4.0") will be in place for the upcoming application windows.

Producers should prepare for the initial application periods under the new CA 4.0 program:

• Television Series (New, Relocating, Pilot, Limited, Recurring): July 7 – 9, 2025
• Independent & Non-Independent Feature Films: August 25 – 27, 2025

Key program changes effective July 1, 2025—contingent on the passage of AB 1138

Assuming that Assembly Bill 1138 is passed and signed into law as expected, the following changes would be effective as of July 1, 2025:

Enhanced Base Credit Rate

The base credit will see a significant jump from 20% to 35%. An additional 5% uplift (for a potential total of 40%) remains available for projects that film outside Los Angeles County, actively encouraging production dispersion across the state.

Expanded Criteria for Eligibility

A wider range of productions will now qualify for the tax credit with California spend of $1M or more, specifically including:

• Animated series and films
• Multi-camera sitcoms (animated, scripted and large-scale competition shows less than 30 minutes)
• Large-scale competition shows
• TV shows with episodes less than 30 minutes

Note: Reality, documentary programming, game, talk shows, as well as above-the-line labor expenditures are still excluded.

New Workforce & Equity Enhancements 

To foster diversity and inclusion within the industry, new provisions have been added:

• 2% Bonus for Trainees: Productions can earn an additional 2% credit by hiring one to four trainees from targeted job programs that serve historically underserved communities. These trainees must be hired in addition to, not in place of, experienced union crew, safeguarding union jobs. 
• Expanded Reporting Requirements: To promote demographic and geographic inclusion, productions must now report on the ZIP codes and veteran status of their workforce, in addition to existing requirements for race, ethnicity, and gender.

Eligible productions can now elect a refundable tax credit

Effective July 1, 2025, California's tax credit program will offer refundability to all qualified applicants. Previously, this was limited (e.g., Independent Producers could transfer credits) otherwise it was non-refundable/non-transferable and needed a California income tax or sales tax to monetize the credit.

If you elect refundability, you'll receive 90% of the credit paid out over five years, regardless of tax liability. Those not electing refundability will still need CA income/sales tax liability or utilize existing transfer option for Independent Producers.

This significant expansion and modernization of California's Film & TV Tax Credit Program are a direct response to the "runaway production" trend that has seen jobs and projects flee to states and countries with more attractive incentives. The California Film Commission estimates that this boost, more than doubling the available funds, could lead to a 40-50% jump in jobs supported by the program, translating to roughly 4,400 to 5,500 new industry jobs.

This is a critical moment for California's entertainment industry. With this substantial new investment and a modernized incentive program, the Golden State is signaling its strong commitment to reclaiming its position as a leading global production hub.