California Lawmakers Propose Bill to Ease Tax Credit Restrictions for Productions

California lawmakers have introduced a new bill to address the impact of recent business tax credit regulations on the state's film and television industry. The proposal would exempt independent productions from certain caps and allow all productions to convert a larger share of their tax credits into cash more quickly. This comes after a budget bill threatened the effectiveness of the state's expanded $750 million production incentive program.

The proposed AB/SB 186 arrives as a direct response to SB 122, signed June 29, which extended caps on business tax credits exceeding $5 million annually and made a 70% liability ceiling permanent from 2030. That law threatened the effectiveness of the 2025 expansion of California’s film incentive program to $750 million, a hard-won increase that had more than doubled available production funding. The new trailer bill does not exempt major studios from those caps, but it sweetens the alternative of monetizing credits—raising the convertible share from 90% to 95% and shortening the payout window from five years to two. It also extends the usable life of pre-2025 credits to 15 years for productions actively shooting in the state. Supporters include the Motion Picture Association, the Entertainment Union Coalition, and the Producers Guild of America, following a campaign that generated roughly 350,000 letters to legislators by mid-August.