California Gov. Gavin Newsom unveiled a sweeping proposal on November 2 to expand the state's film and television tax credit program from $750 million to more than $1 billion annually — a bid to reverse a persistent slide in production activity that has continued even after a major funding boost just one year ago [1].

The announcement, timed to the eve of the 2026 midterm elections, frames the entertainment industry as both an economic engine and a political battleground. Newsom, who is widely seen as positioning himself for a 2028 presidential run, used the occasion to call on Congress to pass complementary federal legislation that would stack on top of state-level incentives [2].

What the Proposal Contains

The expanded program would touch nearly every tier of the production ecosystem. Key elements include [1]:

  • An increase in the annual tax credit cap from $750 million to over $1 billion
  • Expansion of credit eligibility to above-the-line talent, meaning actors' salaries would qualify for the first time, subject to funding caps
  • A $100 million annual set-aside for independent productions, up $26 million from the current program
  • A 5% bonus credit for companies that commit to at least two distinct qualifying productions in California
  • An extension of the program's sunset date from five to ten years, pushing it through 2040

The multi-production incentive mirrors studio partner designations already offered by states like New Mexico and New Jersey, which grant additional tax benefits to companies that anchor production hubs in-state [2].

The Federal Piece

Newsom also renewed his call for Congress to pass the Motion Picture, Television, and Entertainment Revitalization Act (MPTERA) before the end of 2026. The bipartisan legislation would create a 20% base federal tax credit for qualifying film, television, and VFX projects produced in the United States [1]. Because federal credits would layer on top of state incentives, passage of MPTERA could significantly amplify the effective subsidy available to productions choosing California [2].

"California created the modern entertainment industry; we're the capital of entertainment and we're going to keep it here," Newsom said in announcing the proposal. "At least $1 billion in tax credits means more investment flowing into our economy and more opportunity across the industry. But states can't shoulder the cost alone, which is why I am calling on Congress to back up an expanded tax credit by passing national film and TV tax credit legislation already on the table." [1]

A Problem That Won't Stand Still

The urgency behind the proposal is rooted in hard numbers. Despite California raising its annual credit from $330 million to $750 million in 2025 — a move Newsom at the time called a lifeline against competition from Toronto, Vancouver, New Zealand, and the United Kingdom — production levels in the state have continued to fall [2].

Industry tracker ProdPro's October report underscores the competitive pressure: California led with $6.06 billion in production spend over the past 12 months compared with New York's $4.63 billion, but New York's spending surged 87 percent in the most recent quarter while California's grew only 17 percent [2]. More strikingly, New York hosted more live-action features budgeted over $10 million last quarter — 17 versus California's 13 — including projects like Universal's Miami Vice: 85 [2].

Shoot days in Los Angeles, the historic heart of Hollywood, remain in a downward spiral. The dual writers' and actors' strikes of 2023 halted production across the industry, and the recovery has stalled as studios have continued pulling back content spending and cutting television episode orders [2].

Newsom acknowledged the state's complacency at a bill signing last July at Warner Bros.' The Ranch Lot Studios in Burbank. "We put our feet up, we took things for granted," he said [2].

What the Current Program Has Delivered

Newsom's office argues the $750 million credit has already demonstrated its value. To date, it has generated $8.24 billion in direct production spending, including $5.3 billion in qualified expenditures and $3.2 billion in qualified wages supporting more than 43,000 cast and crew jobs [1].

Recent credit allocations illustrate the range of projects the program supports. In a round announced on October 7, Pixar received $40.1 million for an untitled animated feature, Lionsgate secured $30.8 million for a sequel to Michael, and Paramount was granted $29.3 million for an untitled crime thriller [2]. Other recent beneficiaries include The Pitt ($24.2 million), a Snoop Dogg biopic ($17 million), and Ice Cube's Last Friday sequel ($11.4 million) [2].

California Film Commission director Colleen Bell, who is departing her post, praised the governor's push. "The California Film and TV Tax Credit has become one of our most important tools to increase production in California, support crews and strengthen the creative economy that makes this state the entertainment capital of the world," Bell said [2].

Assemblymember Rick Chavez Zbur, a legislator who has worked closely with industry advocates on the incentive program, called the expansion essential to "protecting the future of an industry that has helped define California for generations and ensuring the next generation of creative workers and small business owners can raise their families right here at home" [2].

What Comes Next

Newsom's proposal is a blueprint, not yet law. Implementing the expanded program will fall to whoever succeeds him as governor — with Democrat Xavier Becerra facing Republican Steve Hilton in Tuesday's election [2]. Whether Sacramento legislators will approve the full package, and on what timeline, remains to be seen.

The deeper question is whether money alone can reverse the structural forces pulling production away from California. The state has already doubled its annual credit in the span of a year without arresting the decline in shoot days. Observers should watch whether the proposed above-the-line expansion and the multi-production bonus prove sufficient to change studio location decisions — and whether Congress moves on MPTERA before the end of 2026, which would be the most significant shift in the federal government's relationship to the film industry in decades [1][2].