California Raises Film Tax Credits – But Is It Too Late?

Industry News

by Alexandra ThompsonJuly 7^th, 2025

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Filmmakers don’t have it easy these days. Between fighting for visibility in a world shaped by creators, short-form content, and fluctuating algorithms, and navigating the aftermath of strikes and the growing role of AI, there’s pressure at every level of the industry. Location scouts, set builders, editors, local vendors, everyone connected to production is feeling the strain. “Location, location, location” no longer means just choosing the best place to shoot. It now means finding somewhere you can afford to shoot at all.

In response, Governor Gavin Newsom recently signed a bill raising California’s annual film and television tax credit from $330 million to $750 million. The goal: keep productions from leaving the state. California helped invent Hollywood, but in recent years, it has struggled to maintain its hold. Jobs have moved to other states, like Georgia and New Mexico, where tax incentives are stronger and costs are lower.

According to the Center for Jobs & California Economy, California’s share of motion picture and sound recording jobs dropped from 42.4% in 2022 to 26.7% by May 2024, only slightly above the lows we saw during the pandemic. We wrote about the drop in production in July 2024, and the outlook for 2025 isn’t much better. In fact, according to its 2025 TV & Film Outlook Report, a ProdPro survey on the general outlook for the industry was mostly negative compared to last year, with the opinion among motion picture crew members down to -23%.

California film tax credit – back to work?

Supporters of the new bill are hoping the funding will help get people back to work, especially those crew members hit hard by the pandemic and the recent LA wildfires. But many also argue that this bill is too little, too late. Much of the industry’s infrastructure has already shifted to other states, and with production slowing overall, there may not be enough projects left to bring people back in meaningful numbers (considering that, on average, Americans purchased only around two movie tickets per person last year).

What might help is a second bill, AB 1138, that is also up for a vote and would expand which types of productions qualify, adding animated films, shorts, and large-scale competition shows to the list. It would also raise the percentage of eligible tax credits to 35% in Los Angeles and up to 40% elsewhere. Supporters see it as a necessary step if California wants to stay competitive. Yet, there are still questions about who exactly will benefit from these changes. Will the new credits reach smaller, independent productions? Will it open doors for new voices, or mostly keep things running for those already established?

California film tax credit – a comeback?

In my opinion, California may be trying to make a comeback, but it’s returning to a game that’s changed. Streaming growth has cooled, audiences are scattered across multiple platforms, and reliable work has become harder to find. I don’t mean to sound bleak – there’s still reason to hope, and this kind of support can help, even though the outcome is uncertain. But incentives can’t bring back what’s already been lost. The real question may not be whether Hollywood returns to California, but what kind of industry returns at all.

Credit feature image: Photo by Paul Hart on Unsplash

What are your thoughts about these new bills? Do you think California can do a turnaround and be back in the game? What other choices are out there? Let us know your thoughts in the comments below.