California lawmakers have introduced two companion bills, AB 1138 and SB 630, aimed at modernizing the state's Film and Television Tax Credit Program, which includes a proposal to double its overall funding.

Currently, California's film incentive program provides a 20% tax credit, which is significantly lower than Georgia and New York's 30% rebate, and British Columbia's recent increase to 36%.

Governor Gavin Newsom has proposed increasing the annual funding for the film tax credit program from $330 million to $750 million, positioning California as a leader in capped film incentive programs.

Los Angeles Mayor Karen Bass, a key figure in establishing the incentive in 2009, acknowledged that California's tax credit system has fallen behind compared to more responsive systems in other states.

During a press conference on February 26, 2025, Assemblyman Isaac Bryan emphasized the need for California's incentives to be more competitive against states like Georgia and New York, which offer more attractive tax rebates.

The existing program is oversubscribed, with over 75% of projects that apply for tax credits being turned away, prompting many to seek production opportunities in other states.

Despite expected legislative support for the new bills, there is some opposition in Sacramento regarding the allocation of tax credits for Hollywood, with concerns about diverting funds from other state programs.

The proposals also focus on creating more opportunities in production jobs for underrepresented communities, including formerly incarcerated individuals.

California's film and TV tax credit program has generated approximately 200,000 jobs and $26 billion in economic activity, highlighting its significance to the state's economy.

The proposed changes aim to attract production back to California, addressing the significant decline in production in Los Angeles, which saw a 30% drop in 2024 compared to five-year averages.

Industry representatives argue that simply raising the funding cap is insufficient; structural changes to the program are necessary to effectively combat 'runaway production'.

Key provisions under discussion include increasing the effective rate of the tax credit and expanding eligibility to a wider range of productions, especially those providing quality jobs that are leaving California.