California plans to expand film tax incentives

California Governor Gavin Newsom has proposed increasing the state’s annual film tax incentive from $330 million to $750 million to support its struggling film industry. 

If passed by the State Legislature, the higher tax incentives would go into effect next July.

The move would make California’s tax incentive the nation’s second-largest, trailing only Georgia, which offers unlimited credits.

However, the return on investment isn’t great. According to the New York Times, studies indicated that only 10–25 cents in tax revenue are generated for every dollar spent on such incentives.

Governor Newsom’s expanded funding plan intends to retain film and television productions in-state, providing thousands of jobs and reinforcing California’s role as an industry leader.

State economic officials have voiced concerns about the impact of recent labor strikes and rising competition from other states.

Currently, 38 states offer filming incentives, and Georgia’s program alone has invested over $5 billion since 2015. In the third quarter, film and TV production in the LA area dropped 5% compared to last year.