Gov. Gavin Newsom wants to raise California’s film tax credit to at least $1 billion a year, up from $750 million, according to Variety. The move, announced Monday on the eve of the 2026 midterm elections, would be another major expansion of the state’s incentive for film and TV production.

The governor’s office already calls the current program the largest capped film and TV tax credit in the U.S. His plan has four main parts. It would cover above-the-line spending, which includes actors’ salaries, subject to appropriate funding caps. It would set aside $100 million a year for independent productions, up $26 million from the current program. Companies that commit to at least two distinct qualifying productions in California would receive a 5% boost in credits. The credit would also run through 2040, with the sunset extended from five years to 10.

Newsom’s office says the longer sunset is meant to provide more predictability and support long-term production investment. Taken together, the changes aim to grow the total pot of money, widen the kinds of spending that qualify and reward companies that keep working in the state.

Will a bigger credit bring productions back?

Newsom hopes so. The last increase, from $330 million to $750 million, came last year, yet production in the state kept falling. The governor’s office still points to results: the $750 million credit has generated $8.24 billion in direct production spending to date, including $5.3 billion in qualified expenditures and $3.2 billion in qualified wages for more than 43,000 cast and crew jobs. The hope is that a larger package will attract more productions and the jobs they bring to the Golden State.

Newsom’s term expires on Jan. 4, so carrying out any such proposal will fall to his successor. Xavier Becerra, the Democratic nominee, has promised to enhance the existing credit but has been vague about which enhancements he would support. Many industry stakeholders want an unlimited credit, and Becerra has not committed to that. Newsom’s plan instead calls for funding of at least $1 billion a year.

Lawmakers have already started weighing options. At a hearing last week, a California State Assembly committee discussed measures including eliminating the $750 million cap, allowing above-the-line expenses, expanding eligibility and extending the sunset date. The committee also heard from union leaders and a Motion Picture Association representative, who argued that California must do more to make its incentive competitive with other states.

“California created the modern entertainment industry; we’re the capital of entertainment and we’re going to keep it here,” Gov. Gavin Newsom said when announcing the proposal.

Newsom also called on Congress to pass the federal Motion Picture, Television, and Entertainment Revitalization Act, known as MPTERA, by the end of 2026. The bill has bipartisan support and would establish a 20% base tax credit for qualifying film, television and VFX projects produced in the U.S. In the same announcement, he said states cannot shoulder the cost alone, which is why he wants Congress involved.

The proposal is still just that, a proposal. Newsom has laid out the plan, lawmakers have heard testimony on similar measures, and Congress has been asked to act by the end of 2026. Whether the credit grows to at least $1 billion will depend on the next governor, who will inherit the job of carrying it through.

Quick answers

How large is California’s film and TV tax credit now?
The current program provides $750 million in annual tax credits, which the governor’s office says is the largest capped film and TV tax credit in the U.S. Variety reports that Newsom’s plan would raise it to at least $1 billion a year.

Who would carry out Newsom’s proposal?
Newsom’s term expires on Jan. 4, so the work of carrying out any such proposal will be left to his successor, according to Variety.

Source: Variety