California Gov. Gavin Newsom on Monday called for raising the state's film and television tax credit from $750 million to at least $1 billion a year, seeking to halt a production slump that has continued despite earlier incentive hikes.
The announcement came on the eve of the 2026 midterm elections. The proposal would stretch the credit through 2040. It would open it to above-the-line costs such as actor salaries. It would reserve $100 million annually for independent films. It would grant a 5 percent bonus to firms that commit to at least two California productions, Variety and The Hollywood Reporter said.
Newsom's office said the current $750 million program has driven $8.24 billion in direct production spending since last year's expansion, with $5.3 billion in qualified expenditures and $3.2 billion in wages covering more than 43,000 cast and crew roles. Still, a FilmLA report last month found output slipped 3.7 percent in the third quarter even after the credit rose from $330 million to $750 million in 2025, IndieWire reported.
"California created the modern entertainment industry; we're the capital of entertainment and we're going to keep it here," Newsom said in a statement. He also pressed Congress to approve the federal Motion Picture, Television, and Entertainment Revitalization Act by year's end, which would establish a 20 percent base credit for qualifying U.S. productions.
Rivalry from New York, New Jersey, Georgia and overseas hubs such as the United Kingdom and Hungary has increased pressure on Sacramento. Newsom's term ends Jan. 4, 2027, leaving execution to his successor; Democratic nominee Xavier Becerra has promised to strengthen the credit but has not specified how.