Newsom Seeks to Lift California Film Tax Credit Past $1 Billion

Governor Gavin Newsom on Monday proposed expanding California's film and TV tax credit from $750 million to at least $1 billion annually, on the eve of the 2026 midterm elections.

The governor's office already calls the current program the largest capped film and TV tax credit in the U.S. The new package would extend the credit's sunset through 2040, according to the announcement.

What does the proposal actually contain?

• Annual tax credit funding increased to over $1 billion
• Eligibility expanded to above-the-line spending — actors' salaries — "subject to appropriate funding caps"
• The sunset extended from five years to ten, to "provide more predictability and support long-term production investment"
• A 5% credit boost for companies that commit to at least two distinct qualifying productions in California
• Independent film funding raised to $100 million annually, up $26 million from the current program

Newsom paired the state proposal with a renewed demand for federal action. He called on Congress to pass the Motion Picture, Television, and Entertainment Revitalization Act (MPTERA) by the end of 2026. The bill, which has bipartisan support, would create a 20% base federal tax credit for qualifying film, television and VFX projects produced in the U.S.

"California created the modern entertainment industry; we're the capital of entertainment and we're going to keep it here," Newsom said in announcing the proposal. "At least $1 billion in tax credits means more investment flowing into our economy and more opportunity across the industry."

He added: "But states can't shoulder the cost alone, which is why I am calling on Congress to back up an expanded tax credit by passing national film and TV tax credit legislation already on the table."

Does the money work?

The record so far cuts both ways. California raised its credit from $330 million to $750 million last year, yet production levels in the state have continued to fall. Newsom's office counters that the $750 million program 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 across more than 43,000 cast and crew jobs.

The bet is that a larger, longer and more flexible package will attract productions — and jobs — that other states are currently winning.

Pressure for change has been building in the legislature. At an Assembly committee hearing last week, lawmakers discussed eliminating the $750 million cap, allowing above-the-line expenses, expanding eligibility and extending the sunset date. Union leaders and the Motion Picture Association testified, arguing that California must do more to make its incentive competitive with other states.

Who finishes the job?

Newsom's term expires on January 4. Any expansion he proposes will be carried out — or not — by his successor. Xavier Becerra, the Democratic nominee, has promised to enhance the existing tax credit but has stayed vague on specifics. Many industry stakeholders want an uncapped credit; Becerra has not committed to that.

The governor's announcement sets the number and the framework. Whether $1 billion becomes law, and whether an uncapped program replaces it, depends on the next administration and a legislature still weighing its own, more aggressive versions of the same reform.