MUMBAI: Hollywood is making one last reel for California lawmakers to roll back the pressure. After failing to secure a full exemption for the entertainment industry from California’s new business tax credit caps, industry stakeholders have backed a last-minute legislative proposal aimed at softening the blow for film and television productions.
State Assemblymember Rick Chavez Zbur and Senator Ben Allen on Friday introduced AB/SB 186, which would exempt independent productions from the state’s new business tax credit caps and allow productions receiving state tax credits to realise more of their refunds, and do so faster.
The proposal comes just weeks after a state budget bill signed into law on June 29 raised concerns across Hollywood about the future of California’s expanded film and television incentives.
California had increased its annual film and television tax credit allocation to $750 million in 2025, more than doubling the previous level after a major lobbying push from the entertainment industry. However, SB 122 extended previously temporary limits on the use of business tax credits worth more than $5 million a year, raising concerns that the larger film incentive could be harder for productions to fully use.
The legislation also makes permanent from 2030 a ceiling on the use of credits above $5 million a year, set at 70 per cent of a taxpayer’s liability, whichever is greater.
AB/SB 186 would not remove those caps for major productions. Instead, it seeks to make the tax credits more useful by improving the option to monetise them, a mechanism introduced in 2025.
Under the proposed changes, productions would be able to monetise 95 per cent of their refund, up from 90 per cent, while the period for collecting the money would be cut from five years to two.
The bill would also give productions more breathing room on older credits. Credits earned before the 2025 changes would receive a later expiration date for productions actively shooting in California, while productions recently awarded California tax credits would have 15 years to use them, compared with the previous nine years.
The proposal has won backing from the Motion Picture Association (MPA), which represents major studios and streamers, as well as the Entertainment Union Coalition and the Producers Guild of America.
The push follows an intense lobbying campaign by unions and the MPA against including Hollywood in the business tax credit caps. By August 14, around 350,000 letters had reportedly been sent to legislators voicing concerns about the impact of the budget bill on production in California.
But while AB/SB 186 could help productions extract more value from their credits, it may not fully repair the industry’s growing concern over policy certainty. Stakeholders have warned that sudden changes to California’s incentive framework could make companies wary of committing to long-term production plans in a highly mobile global industry.
And time is now the biggest producer in the room. California legislators have until the August 31 adjournment of the legislative session to get the proposal through.
Allen said the state risked losing the momentum and jobs generated by the previous year’s expansion of the film and television programme, while Zbur acknowledged that the proposal does not solve every challenge facing the industry.
For Hollywood, then, the message from Sacramento is less cut to black and more one more take. The proposed bill could offer productions a little more financial room to stay in California but whether it restores the industry’s confidence in the state’s long-term incentives remains another scene waiting to be written.
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