More help for struggling Hollywood productions is on the way starting next month as a measure to increase California’s film and television tax credit budget from $330 million annually to $750 million was approved by state legislators June 27.

The increased tax credit program was included as a trailer bill added to the fiscal 2026 Budget Act, which passed on June 13. Gov. Gavin Newsom is expected to sign the budget Friday after negotiations with legislative leaders wrap up.

Legislators continued to negotiate on details of the budget Friday before it goes into effect July 1.

In October 2024, Newsom proposed a plan to expand the existing tax credit program to $750 million.

“California is the entertainment capital of the world, rooted in decades of creativity, innovation, and unparalleled talent,” Newsom said in October. “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 bill cleared the state Senate’s Revenue and Taxation Committee on Thursday, then passed in the Senate and Assembly on Friday.

The Legislature passed the first Motion Picture, Television, and Commercial Industries Act of 1984, creating the California Film Commission, which now operates the tax credit program.

The first program started in 2012 and allocated $100 million in credits, according to the Legislature.

In 2014, state lawmakers increased the program to $330 million each year. It was renewed three times and was set to end on June 30.

The program uses a “base 20 percent incentive,” which means the tax credit in California starts at 20 percent of a film producer’s in-state spending, up to a specified amount.

Dolby Theatre, where the Oscars have been held, on Hollywood Boulevard in Los Angeles. (Jullit31/CC BY-SA 2.0)

The California Film Commission can allocate credits to feature, miniseries productions, new television series productions, independent films, and TV pilots.

An array of productions are ineligible for the program, including animated films, commercials, public event programs, daytime dramas, documentaries, educational programming, music videos, talk shows, game shows, reality programming, and sexually explicit films.

The newly increased program will continue through June 30, 2030.

Beginning July 1, the California Film Commission will increase the allocations from two to four times a year and make other small program changes, including increasing the cap on qualified expenditures from $100 million to $120 million.

The commission will also be required to file “diversity work plan assessments” to the Legislature. The new bill adds veteran status to the statement of diversity goals that a qualified motion picture will seek to achieve.

A fiscal analysis estimates that the program will result in state revenue losses of about $20 million from July 1, 2025, to June 30, 2026.

The losses are expected to grow because credits are claimed four years after allocation on average, as film productions typically take multiple years.

The budget losses are expected to reach $85 million in fiscal 2027, and $170 million in fiscal 2028, according to the legislative analysis.

Assemblyman Rick Chavez Zbur, of Los Angeles, and Sen. Ben Allen, of Pacific Palisades, both Democrats, introduced the trailer bill in its current form on April 29.

According to Zbur, the bill’s author, the measure will strengthen and modernize the Film and TV Tax Credit Program.

“This bill increases the base tax credit rate to be more competitive with other jurisdictions, expands eligibility for a broader range of types of production, enhances the program for independent films, and addresses administrative and other barriers,” Zbur said, according to the analysis.

During a March 26 legislative hearing, the Los Angeles County Economic Development Commission claimed that the effect of the program continues to be “vital to keeping well-paying entertainment jobs in California, generating a total of $7.4 billion in production spending,” according to the legislative analysis.

The Legislative Analyst’s Office stated during the hearing that the tax credit was a reasonable and effective way to increase film and television production in the state, especially given the mobility of the film industry and its responsiveness to tax incentives.

The California Budget and Policy Center, a nonpartisan nonprofit that analyzes public policy issues, recommended support for social programs instead of the entertainment industry, especially given the state’s uncertain fiscal condition and possible federal funding cuts, according to the legislative analysis.

The state’s share of the entertainment industry’s employment nationwide has decreased from more than 54 percent in 2010 to 46 percent in 2023, becoming more volatile over the past few years.