California Legislature Passes Bill to Address Catch in $750 Million Tax Credit for Hollywood
The California state legislature has passed a bill intended to mitigate the impact of business tax credit caps on the state’s $750 million annual film and television incentives program.
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Legislators voted to pass SB 186, carried by state Senator Ben Allen, on Monday night. The legislation is now in the court of Gov. Gavin Newsom, who will decide to sign the bill into law or veto it by the end of September.
The bill, introduced at the last minute on Friday from Allen, with a companion bill from Assemblymember Rick Chavez Zbur introduced in the Assembly, addresses the fallout from a state budget bill, called SB 122, that alarmed Hollywood production advocates when it was signed into law earlier in the summer.
SB 186 exempts indie productions from annual caps on the use of business tax credits that are rendered permanent as a result of the 2026 state budget legislation. The legislation also sweetens conditions for productions that choose to monetize a portion of their tax credits instead of putting the full value towards their tax liability. The bill allows production to monetize 95 percent of their credits, where previously they could monetize 90 percent.
Under the auspices of the bill productions can also collect their money within two years, rather than five years.
In a statement, one of the champions of the bill — the Entertainment Union Coalition — celebrated its passage. “On behalf of our 167,000 members across California, the Entertainment Union Coalition (EUC) thanks Governor Newsom and Legislators for ensuring that the recently enacted SB 122 would not undermine the competitiveness of the California Film and Television Jobs Program passed just last year,” EUC president Rebecca Rhine said in a statement.
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Rhine added, “We appreciate that Assemblymember Rick Zbur and Senator Ben Allen saw the risk and worked diligently on a very short timeline to achieve passage in the final hours of this Legislative session, and we appreciate the Governor’s commitment to our industry and this bill.”
In 2025, after a major lobbying push, Gov. Gavin Newsom signed into law an expansion of the state’s film and television tax credit from $330 million per year to $750 million a year. Advocates warned that the 2026 state budget bill’s caps on annual usage of business tax credits jeopardized that accomplishment and that the sudden policy change might scare productions away from the state.
While the industry initially sought to exempt Hollywood entirely from the state budget bill, advocates ultimately had to settle for a legislative Band-Aid. According to the Entertainment Union Coalition, 450,000 union members wrote letters to legislators as part of the effort to raise awareness of SB 122’s impact on Hollywood.
In a statement issued on Tuesday, Motion Picture Association chairman and CEO Charlie Rivkin lauded the legislature for having “taken steps to help the Golden State remain an attractive and competitive destination for production.”
Rivkin added, “This new resolution to SB122’s previously unintended restrictions to the CA Film & TV Jobs program will maintain the program’s competitiveness so creators continue to make movies and shows in California – and keep bringing brilliant stories to life.”
