California lawmakers have agreed on a partial carveout for the film and TV industry from a state cap on tax credits.
The bill, AB 186, was unveiled on Friday evening. It addresses concerns raised in June by the Motion Picture Association and a coalition of entertainment unions, who argued that the cap threatened to undermine the state’s $750 million tax incentive program.
The state budget seeks to stabilize revenues by preventing corporations from claiming more than $5 million a year in tax credits for the next three years. Industry stakeholders argued that the measure had the unintended consequence of hamstringing Hollywood’s recovery by limiting the ability of studios to use state incentives for in-state production.
The MPA and the Entertainment Union Coalition have signed on to the agreement. As Variety reported on Aug. 18, the deal falls short of their request for a complete exemption for film tax credits from the $5 million cap.
The agreement also fully exempts credits for independent film — which account for 10% of the $750 million program — from the cap.
