California Gov. Gavin Newsom has proposed another large expansion of the state’s Film and TV Tax Credit Program, seeking to raise annual funding from $750 million to at least $1 billion. The proposal pairs the larger pool with several structural changes intended to make California a more predictable and attractive base for film, television and qualifying visual-effects work.

The plan is a proposal, rather than a confirmed change to the program. Its stated elements include making certain above-the-line spending eligible for credits, reserving $100 million each year for independent productions, providing an extra incentive for companies that bring multiple qualifying productions to California, and extending the program through 2040.

The timing matters because California expanded the program from $330 million to $750 million last year, yet production levels in the state have continued to decline. The proposed increase is therefore not simply a bigger version of an existing credit; it is an attempt to address competition for projects and to encourage production companies to make longer-term California commitments.

What the proposed program would change

Newsom’s proposed package contains five central changes:

  • Annual tax-credit funding would rise to more than $1 billion.
  • Eligibility would expand to certain above-the-line spending, subject to funding caps.
  • The program’s sunset would move from five years to 10 years, extending it through 2040.
  • Companies committing to at least two separate qualifying California productions would receive a 5% boost in credits.
  • Annual independent-production funding would reach $100 million, an increase of $26 million from the current program.

Each item deals with a slightly different part of the production decision. The total funding level determines how much support is available overall. Above-the-line eligibility changes which portions of a budget may count. The multi-production bonus is designed to reward repeat work in the state. A longer sunset date is meant to provide planning certainty for productions that may take years to develop and schedule. The independent allocation sets aside a defined share of the program rather than leaving those projects to compete only within the broader credit pool.

Above the line: the important budget term in this proposal

Above-the-line is a film and television budget term that generally refers to major creative personnel and rights-related costs, as distinct from the many crew, equipment, location and operational expenses commonly categorized below the line. In this proposal, the key example is actors’ salaries.

That distinction is significant because eligibility rules determine what spending can be considered when a production applies for an incentive. Newsom’s proposal would broaden the program to include above-the-line spending, but it also specifies that this would be subject to appropriate funding caps. In other words, the proposal describes a wider category of eligible costs, not unlimited support for those costs.

The practical effect would depend on the eventual caps and rules, which are not detailed here. Still, the policy direction is clear: California would seek to make its incentive calculation relevant to a larger share of qualifying productions’ budgets.

A separate push for repeat productions

The proposed 5% credit boost for companies that commit to at least two distinct qualifying productions in California focuses on repeat production rather than one-off projects. A company considering several projects could potentially weigh the extra benefit against the logistical and financial case for spreading work across different places.

That is distinct from the general annual increase. More funding increases the scale of the program, while the repeat-production incentive attempts to shape the kind of commitments it attracts. The proposal is aimed at sustained activity, not solely at winning a single title.

Newsom framed the proposal as an investment-and-jobs measure, saying that California created the modern entertainment industry and that at least $1 billion in tax credits would mean more investment and opportunity across the business.

Why the 2040 extension is part of the pitch

A sunset is the date on which a program is scheduled to end unless it is renewed or extended. The proposal would lengthen California’s Film and TV Tax Credit sunset from five years to 10 years, taking the program through 2040.

That longer horizon is intended to offer more predictability for long-term production investment. For a company assessing where to base a slate of projects, the durability of an incentive can matter alongside the amount of the incentive itself. Under this proposal, the state would be signaling that the program is intended to remain in place for a decade rather than on a shorter renewal cycle.

It does not guarantee that any particular production will receive a credit. It is instead a proposed extension of the framework under which qualifying projects can seek support.

Independent productions would receive $100 million annually

The plan would raise independent film funding to $100 million per year, up $26 million from the current program. This is one of the more concrete allocations in the proposal because it identifies a specific annual amount for independent productions.

In program-design terms, an earmark means a portion of the total funding is designated for a stated purpose. Here, it means independent projects would have a dedicated $100 million allocation within the larger incentive structure. The proposal does not provide further eligibility details, so it would be premature to assume how individual productions would qualify or how that funding would be distributed.

The figures California cites so far

Newsom’s office says the current $750 million tax-credit program has produced $8.24 billion in direct production spending to date. That total includes $5.3 billion in qualified expenditures and $3.2 billion in qualified wages associated with more than 43,000 cast and crew jobs.

Those figures are being used to make the case for the expansion even as California’s broader production levels have fallen over the past year. The two points are not necessarily contradictory: the state is presenting substantial spending and employment connected to the current credit while acknowledging that it wants a larger and more competitive package to reverse a broader decline in production activity.

For workers, the policy emphasis is explicitly on attracting productions and the jobs attached to them. For production companies, the potential appeal is a larger annual credit pool, possible recognition of a broader range of budget spending, a bonus for multiple projects and a longer period of policy continuity. Whether those changes ultimately alter production decisions will depend on the final program rules and implementation.

The proposal also points toward a federal credit

Alongside the California plan, Newsom again called on Congress to pass the Motion Picture, Television, and Entertainment Revitalization Act, or MPTERA, by the end of 2026. The bipartisan federal legislation would establish a 20% base tax credit for qualifying film, television and VFX projects produced in the United States.

VFX, short for visual effects, refers to effects work used in screen productions. Its inclusion in the federal proposal is notable because the proposed credit would cover qualifying projects across film, television and visual-effects production rather than only conventional live-action shoots.

Newsom argued that states cannot carry the cost by themselves and called for federal legislation to support expanded state incentives. The federal measure described here would not replace California’s proposal; it would create a national base credit for qualifying U.S. projects. California’s proposed program, meanwhile, is built around incentives for qualifying work undertaken in the state.

That federal angle is relevant to the wider screen-production ecosystem, including fields adjacent to games. Recognition for game scores, songs and music supervision has recently been a subject of industry attention, as seen in Hollywood Music in Media Awards nominations spanning game music. But the California proposal itself is specifically framed around film and television production, with qualifying VFX work named in the separate federal measure.

What is known, and what remains undecided

The available proposal establishes the major funding target and the policy priorities: at least $1 billion in annual credits, above-the-line eligibility with caps, a $100 million independent-production allocation, a 5% repeat-production boost and a 2040 end date. It also provides the administration’s cited results for the existing program.

Important implementation details are not specified. The proposal does not set out the precise caps for above-the-line spending, explain every qualification standard, or establish how applicants would be selected within the enlarged pool. It also does not promise that production activity will rise by any particular amount.

For now, the clearest takeaway is that California is seeking to expand both the scale and scope of its screen-production incentive. The state’s pitch combines more annual support with a longer timeline and incentives calibrated for independent projects and companies prepared to bring multiple productions to California.