Gavin Newsom proposes $1 billion film tax incentive in California

The day before his successor as California governor is elected in a high-stakes midterm election, Gavin Newsom is going out with a bang.

A billion-dollar-plus cinematic and television bang, to be precise.

In what might be called a seismic November surprise in any other normal election year, potential POTUS nominee Newsom is proposing to increase the Golden State’s $750 million tax incentive program for film and television to more than $1 billion.

Newsom’s landmark decision would make California’s Big and Small Screen Tax Credits the largest capped program in the United States. While Georgia’s media tax incentive has long been uncapped, increasing California’s investment (which the tax credit program run by the California Film Commission has proven lucrative) to $1 billion could leave New York (and its burgeoning production) in the bicoastal dust.

“At least $1 billion in tax credits means more investment in our economy and more opportunity in manufacturing,” Newsom said Monday morning. “With this expansion, we will maintain the momentum and success of our historic expansion last year. But states cannot shoulder the cost alone, which is why I am calling on Congress to support an expanded tax credit by passing national Film and Television Tax Credit legislation already on the table.”

The much-publicized bipartisan federal plan, supported by strange bedfellows Donald Trump, Newsom, Sen. Adam Schiff (D-CA), Hollywood’s guilds, studios, streamers and MAGA stalwarts, remains on the procedural back burner at least until tomorrow’s midterms and their aftermath. Yet hidden within Newsom’s announcement today are some pretty shiny trinkets for a struggling West Coast industry that has seen a crater in production and more than 50,000 direct jobs lost over the past six years.

Backed by influential state Assemblyman Rick Chavez Zbur, who literally represents Hollywood, Newsom’s latest plan calls for long-awaited and long-desired changes to the way money is distributed to productions in California. If passed just under a year and a half after CA tax credits were increased from $330 million a year to $750 million, Newsom’s revamped billion-dollar baby also promises to:

🎬 Extend eligibility for the tax credit to expenses above the limit and make above-the-line compensation an eligible expense to ensure that top creative industry talent remains here in this state, subject to appropriate funding caps.

🎬 Extend the duration of the tax credit from five to ten years to provide more predictability and support long-term production investments.

🎬 Introduce an incentive for companies that engage in two or more separate eligible productions in California by increasing tax credits by 5%.

🎬 Increase funding for independent films to $100 million per yearan increase of $26 million from the current program, to strengthen California’s independent film sector and support a broader range of productions and creative talent.

Now, getting back to reality, it is extremely unlikely that lame duck Newsom will be able to get the increase through the Sacramento legislature before leaving office in January 2027.

However, with poll-leading former California Attorney General and U.S. Health Secretary Xavier Becerra poised to replace his former boss as governor, Newsom’s big gamble has a good chance of becoming law and cementing his Hollywood legacy.

During the near-concluded campaign, Becerra and his GOP gubernatorial rival, Steve Hilton, as well as, to a lesser extent, Los Angeles mayoral candidates Nithya Raman and Karen Bass, presented their own proposals to boost the state’s film and television tax credit program. Additionally, a $10 million post-production tax credit was signed into law by Newsom in September. Echoing Becerra’s previously released plan, it’s worth noting that Newsom’s plan today emphasizes capping incentives — which is clearly aimed at helping Hollywood, but also not destroying the state’s current theoretically balanced budget of $352 billion.

However, it is not a bad decision for the Hollywood house, which needs a boost to return to the ring. Not a bad move at all for an ever-filming CA pol like Gavin Newsom with DC ambitions and donor coffers to fill.

BTW – Successful recipients of California’s next round of film and television tax credits should know before Thanksgiving whether they and their productions have realized big cash cuts. With a projected spend of $1.08 billion in the state, the latest big screen tour was released to the public on October 7. Michaelthe successful Lionsgate biopic on Michael Jackson, as well as that of New Line Friday following Last Friday and a new project from independent filmmaker Mike Mills, were all in the winner’s circle, so to speak.