California expands tax incentives to keep Hollywood at home

The state Governor, Gavin Newsom, announced a new increase in the tax credits allocated to the film and television industry by $330 million for the next five years.

28 OCT 2024

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California has announced a significant expansion to its film and TV tax relief program. Governor Gavin Newsom announced a new increase in the tax credits allocated to the film and television industry by $330 million. The expanded program, which is set to take effect over the next five years, is intended to boost California’s competitive edge in the face of escalating incentives offered by other states and even countries.

This expanded credit will not only retain major productions but also support mid-sized and smaller projects that typically struggle to secure financing. By expanding the cap on incentives available to individual productions, the state aims to attract a more diverse range of projects and companies, thus creating a ripple effect through the state’s economy. The program encourages productions to employ local talent and use local vendors, further integrating Hollywood's economic impact within the broader Californian economy .

California's expansion of the incentive is also expected to have a notable impact on local employment. Part of the initiative is to incentivize productions in economically underserved regions of the state. This includes rural areas and parts of Los Angeles County that have traditionally seen little production activity. Newsom and proponents of the bill believe this will help create a more equitable distribution of industry benefits, bringing job opportunities and training initiatives to communities that could benefit from Hollywood’s economic activity. The program also provides additional credits to productions that offer job training to California residents, addressing the industry's long-standing skill gap by building a local workforce trained to meet production demands.

In addition to economic considerations, the bill includes incentives for productions to reduce their environmental impact. The expanded program encourages eco-friendly practices on set, like minimizing waste and using sustainable materials. This is part of California's broader environmental goals, aligning Hollywood’s production practices with the state’s progressive climate targets and showcasing an environmentally responsible model for the industry nationwide .

As California positions itself to retain and attract new productions, stakeholders within the industry remain optimistic about the expanded tax rebate’s potential. Proponents argue that the increased incentives will lead to greater economic stability and job creation, while critics suggest that the true benefits need to be evaluated over time. However, with California being the historical home of Hollywood, this expanded program represents a renewed commitment to keeping film and television at the heart of the state’s economic and cultural landscape.