The entertainment industry in California won a crucial lifeline when Gov. Gavin Newsom signed a $420 million boost to the state’s film and TV tax incentives program into law in 2025.
Now, stakeholders claim that win is in jeopardy thanks to language in a recent state budget bill that was signed into law on June 29. And they’re racing to pass a solution by the end of the legislative session.
“Budget bill SB 122 puts our program at risk by retroactively changing the rules and threatening the recovery efforts of our already fragile industry throughout California,” reads one letter that entertainment unions are encouraging their members to send to legislators. “Changing the rules after the fact creates uncertainty and instability, further disrupting our struggling industry.”
The letter calls for the legislature to exempt the entertainment industry from the bill in question, SB 122. So far, around 350,000 such messages have been sent to legislators from union members, a spokesperson for the Entertainment Union Coalition tell The Hollywood Reporter.
SB 122 extends temporary caps on the use of business tax credits over $5 million in a given tax year and, starting in 2030, enshrines a permanent tax credit cap of 70 percent of a taxpayer’s liability or $5 million, whichever is greater. Practically speaking, that means that if a major studio has earned tens of millions in tax credits in a single year by locating their productions in the state, it could take years to realize the full value of those credits.
