Hollywood Asks Newsom to Exempt Film Credits From Tax
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- A coalition of industry and labor groups — including the Motion Picture Association and Hollywood unions — sent a June 8 letter to Gov. Newsom arguing his budget proposal poses "a direct and immediate threat to tens of thousands of middle-class jobs."
- Newsom more than doubled California's film incentive to $750 million last year to reverse a production downturn, but his upcoming fiscal year budget would cap how much of those credits companies can actually claim.
- The coalition is pushing for a carve-out exempting film credits entirely from the new limitation, arguing the credits were already approved and accounted for by the Legislature through 2030.
- The latest budget version working through the Legislature would impose a flat $5 million cap on credit utilization for three years, followed by a permanent 70%-of-tax-liability limit starting in 2030.
- The California Department of Finance called the 70% threshold "an appropriate middle ground," noting companies can still use credits to offset sales tax and redeem refundable credits over five years at a 10% discount.
- Jackie Brenneman, president and CEO of the Independent Film and Television Alliance, warned the cap shrinks the buyer pool for transferable tax certificates and depresses prices indie producers receive when selling them.
- The letter also flagged that pre-2025 non-refundable film credits — which companies couldn't claim because of earlier utilization limits — are now at risk of expiring, and should be made refundable or transferable.
Why it matters: California is weighing a $5 million (rising to 70%) credit utilization cap to close a structural deficit by July 2028, but the same budget already carved out film credits at $750 million — and independent producers argue the new cap erodes the transferable-credit market that finances their projects. The fight turns on whether the state can claim a fiscal middle ground without pushing productions to Georgia, New York, or the U.K.
