California Gov. Gavin Newsom has proposed to make the state’s film and TV tax credit refundable -- in a bid to compete with other major states' schemes.
Newsom outlined the plans in his 2023-2024 proposed budget on Tuesday (10 Jan), which seeks to to extend the current tax credit program for five more years.
The film and TV tax credit summary reads: The Budget proposes to extend the Film and Television Tax Credit Program at $330 million per year for five years beginning in 2025-26 (Program 4.0) and make it refundable prospectively for the new Program 4.0. The existing Film and Television Tax Credit Program 3.0 provides tax credits for eligible films produced in California through 2024-25.
This credit retains and supports the growth of production jobs in the film industry and stimulates economic activity statewide, enhancing California’s position as the leading national and global location for all forms of media content creation. Making the credit refundable will benefit a wider range of productions and ensure the competitive program will maximise economic benefits to the state. Credit recipients with insufficient tax liability will be able to claim a tax refund at a discounted value over multiple years to lessen the revenue loss to the state. Credits applied against tax liability will retain their full value.
“The proposed budget affirms Governor Newsom’s leadership in ensuring California’s Film and TV Tax Credit Program evolves and continues to deliver on our goal of retaining and growing in-state production,” California Film Commission Executive Director Colleen Bell said in a statement. “The five-year extension and provision to make tax credits refundable will give industry decision makers more options and the certainty they need to make long-term investments here in the Golden State. This will translate into more production-related jobs, spending and opportunity.”
According to Newsom's proposed budget, making credits refundable “will benefit a wider range of productions and ensure the competitive program will maximise economic benefits to the state.”
In a statement on Tuesday, Motion Picture Association chairman and CEO Charles Rivkin said that Newsom’s proposed budget “underscores the importance of funding programs that stimulate our economy and support job creation.” Rivkin added: “The [MPA] applauds Governor Newsom for acknowledging the role California’s film, television, and streaming industry can play in driving economic growth. We look forward to working with leaders in the legislature alongside our union, guild, and other industry partners to pass this important extension that will bolster the creative economy and keep California the home of motion picture production.”