Steve Hilton Pledges 40% Film Tax Credit, No Cap, in Hollywood Revival Plan

Steve Hilton wants to raise California's film tax credit to 40%, and possibly 50%, if he wins the governor's race. The Republican candidate rolled out an expanded plan Wednesday to revive Hollywood production, shared with Variety, that pairs bigger incentives with state-backed financing for studio repairs.

Hilton, who trails Democrat Xavier Becerra in the polls, had already promised to eliminate the $750 million cap on the state's film incentive. The new plan adds detail and, notably, a push to modernize the state's soundstages.

What does the plan actually contain? The core is a shift in how the incentive works:

• A 40% state tax credit for production, with a floated ceiling of 50% for five years.
• Elimination of the $750 million annual cap, making credits automatic rather than rationed.
• Continuous rolling approvals replacing narrow application windows, with an answer within 30 days.
• A five-year sales tax exemption on building materials for studio construction.
• State-backed bond financing for studio acquisition and renovation.
• Extending eligibility to commercials, documentaries and reality TV, all currently excluded.

Hilton also wants to include actors' salaries and other "above the line" costs (the budget lines for creative talent rather than crew) in the program.

"No governor can reverse every decision made by an entertainment company, nor should a governor try to micromanage private businesses — or indeed the structure of a fast-changing industry," the plan states. "But California's government is responsible for the costs and bureaucracy it imposes on people trying to work here, and for its response to competitive pressures from other places."

What does this change for productions?

Right now, California offers a 35% credit on below-the-line costs (crew, equipment, post-production) for films and TV shows selected by the state film commission, with bonuses up to 45%. Productions must apply at periodic intervals, and the program is sometimes oversubscribed and shut to new applicants. Hilton's automatic, uncapped credit would remove that lottery element — though the plan doesn't say what it would cost the state treasury.

The context is stark. Both candidates acknowledge the downturn: roughly 52,000 production jobs lost statewide over the last four years. Both also back a federal film incentive introduced in Congress last month, which would create a 20% tax credit on all U.S. labor costs.

Where the candidates split

Becerra has issued his own position paper for the entertainment industry, but it's shorter on specifics. He has declined to say whether he would eliminate the cap on the state tax incentive, arguing he'll wait to see what proposals emerge from the state legislature.

The soundstage piece has a precedent. Gov. Gavin Newsom approved $150 million in 2021 to boost soundstage construction; that funding is now depleted, and there has been no discussion yet about replenishing it. Los Angeles soundstages sit at 62% occupancy, according to the latest FilmLA report, even as new stages continue to open.

Hilton's bet is that certainty — guaranteed credits, fast approvals, no cap — beats targeted subsidies at pulling productions back. Whether voters buy it, and whether the legislature would fund an uncapped program, will decide if the number on paper ever becomes the number on a budget line.