Newsom Proposes a $1 Billion Film Tax Credit That Would Cover Star Salaries for the First Time

The plan would raise California's credit from $750 million a year, extend it through 2040 and add $100 million for independent films, but Newsom has two months left in office to get it through the Legislature.

By Herald Staff · Nov. 2, 2026, 11:30 AM ET

A row of cream-colored studio soundstages with arched roofs and tall open doors glows in golden-hour light on a palm-lined backlot, with a camera crane, a light stand and equipment cases waiting on the lane and the Hollywood Hills hazy in the distance. — Newsom's plan would raise California's film and TV tax credit to at least $1 billion a year and, for the first time, let productions count pay for actors, directors and other top talent.

Gov. Gavin Newsom on Monday proposed raising California's film and television tax credit from $750 million a year to at least $1 billion, and for the first time letting productions claim credits on what they pay their biggest names. The plan, announced by the governor's office on the eve of Tuesday's election, would make California's program the largest capped film and TV incentive in the country.

"California created the modern entertainment industry; we're the capital of entertainment and we're going to keep it here," Newsom said in the announcement. "At least $1 billion in tax credits means more investment flowing into our economy and more opportunity across the industry."

What the Plan Would Change

The proposal has five main pieces, according to the governor's office:

Annual credit funding would rise from $750 million to more than $1 billion.
Above-the-line spending, the pay for actors, directors and other top creative talent, would count as a qualified expense, "subject to appropriate funding caps."
The program's sunset would stretch from five years to 10, extending it through 2040. The current program runs until mid-2030, Politico reported.
Companies that commit to at least two separate qualifying productions in California would get a 5% boost in credits.
Money set aside for independent films would grow to $100 million a year, up $26 million from today.

The above-the-line change is the biggest shift. It would bring California in line with states such as Georgia and Illinois that have drawn productions away with richer incentives, Politico reported. The idea has divided Hollywood. Unions have pushed to keep the credit focused on below-the-line costs so the money goes to crew-heavy productions, while studios, through the Motion Picture Association, have lobbied to include star salaries to compete with Georgia and New York, TheWrap reported.

A Year After the Last Expansion

The proposal comes about a year after California more than doubled the credit from $330 million to $750 million a year. The governor's office says the first year of that expansion brought an 82% jump in applications, $8.25 billion in direct production spending, more than 43,000 cast and crew jobs, and a 52% rise in film shoot days year over year.

Production in Los Angeles itself has not recovered. "Production levels in the state have continued to fall," Variety reported, and Deadline noted that the industry has lost more than 50,000 jobs directly over the past six years. In October, FilmLA reported that on-location filming in Los Angeles fell nearly 5% in the third quarter from a year earlier and sat 36% below the five-year average, even as projects using the state credit made up a record share of local shoots, The Hollywood Reporter reported.

The city has been trying its own fixes. Last week the City Council approved a free permit for crews of 10 or fewer filming in public spaces and cut parking fees at city-owned lots to $1 a day for most productions, the Los Angeles Business Journal reported.

Support in Sacramento, Doubts About Timing

Assemblymember Rick Chavez Zbur, a Democrat who represents Hollywood, backed the plan. "While we've made tremendous progress, we must continue building on that momentum to ensure California remains the film and television capital of the world," he said in the governor's announcement. California Film Commission Director Colleen Bell called the credit "one of our most important tools to increase production in California."

Getting it passed is another matter. Newsom is term-limited, and Deadline wrote that it is "extremely unlikely" he could get the increase through the Legislature before he leaves office in January 2027. That leaves the plan's fate largely to his successor. Several candidates for governor, including Tom Steyer, Steve Hilton and San Jose Mayor Matt Mahan, have said they want to remove the program's cap altogether, according to TheWrap.

A Push in Washington, Too

Newsom also renewed his call for Congress to pass the Motion Picture, Television, and Entertainment Revitalization Act by the end of the year. The bipartisan bill would create a 20% federal tax credit for qualifying film, TV and visual effects work done in the U.S., which could be stacked on top of state incentives, Variety reported. "States can't shoulder the cost alone," Newsom said.

Since 2009, the state program has generated more than $35.4 billion in economic activity and supported more than 248,000 cast and crew jobs, according to the governor's office.

Original reporting by The Los Angeles Herald, drawing on the Office of Gov. Gavin Newsom, Politico, Variety, Deadline, TheWrap, The Hollywood Reporter and the Los Angeles Business Journal, as linked above.