California Tries Offering Hollywood New Perks to Make Up for Catch In $750 Million Incentive Program

After failing to secure an exemption for the entertainment industry, stakeholders have made a last-minute proposal to mitigate the impact of California‘s new business tax credit regulations on Hollywood.

State Assemblymember Rick Chavez Zbur and Senator Ben Allen on Friday introduced AB/SB 186, which if passed would exempt indie projects from the state‘s new business tax credit caps and allow all productions with state tax credits to monetize more of their refunds, faster.

“Last year, we took action to get families back to work and jumpstart the State’s film and television industry,” Senator Allen said in a statement. “However, we’re at risk of losing this momentum, and all the jobs we’ve created over the last year, if we don’t act by the end of the month. I’m grateful for the support from Governor Newsom, Assemblymember Zbur and the legislative leadership to help us find a path forward that will retain California’s status as the global hub of entertainment.”

Stakeholders say a state budget bill that was signed into law on June 29 has jeopardized the celebrated increase to California‘s film and television tax credit increase to $750 million in 2025. That 2025 boost to the program, the result of some serious lobbying from Hollywood, more than doubled the amount of funding that could be allocated to giving productions tax relief.

But budget bill SB 122 threatened its viability by extending previously temporary caps on the use of business tax credits over $5 million a year. The budget bill also made the ceiling on using credits over $5 million a year, or 70 percent of a taxpayer’s liability, whichever is greater, permanent starting in 2030.

The new trailer bill wouldn‘t give major productions a pass from these caps, but it would enhance the perks for productions that choose to monetize a portion of their tax credits rather than put them towards their tax liability. (The ability to monetize a portion of the tax credits is relatively new, having been signed into law in 2025). The bill allows production to monetize 95 percent of their refund, as opposed to the previous 90 percent, and speeds up the collection period from five to two years.

The bill additionally would push back the expiration date for credits earned before 2025‘s changes to the program for productions actively shooting in California. Productions recently awarded California tax credits would have 15 years to use them, rather than the previous nine.

The trade organization for major studios and streamers, the Motion Picture Association, supports the bill alongside the Entertainment Union Coalition and the Producers Guild of America.

The introduction of AB/SB 186 follows a major lobbying campaign from unions and the MPA , as well as a letter-writing campaign from union members, to oppose the inclusion of the entertainment industry in the business tax credit caps.