After failing to secure an exemption for the entertainment industry, stakeholders have made a last-minute proposal to mitigate the impact of California‘s new business tax credit regulations on Hollywood. State Assemblymember Rick Chavez Zbur and Senator Ben Allen on Friday introduced AB/SB 186, which if passed would exempt indie projects from the state‘s new business tax credit caps and allow all productions with state tax credits to monetize more of their refunds, faster.

“Last year, we took action to get families back to work and jumpstart the State’s film and television industry,” Senator Allen said in a statement. “However, we’re at risk of losing this momentum, and all the jobs we’ve created over the last year, if we don’t act I’m grateful for the support from Governor Newsom, Assemblymember Zbur and the legislative leadership to help us find a path forward that will retain California’s status as the global hub of entertainment.” Stakeholders say a state budget bill that was signed into law on June 29 has jeopardized the celebrated increase to California‘s film and television tax credit increase to $750 million in 2025.

But Overview & Context

That 2025 boost to the program, the result of some serious lob But budget bill SB 122 threatened its viability The budget bill also made the ceiling on using credits over $5 million a year, or 70 percent of a taxpayer’s liability, whichever is greater, permanent starting in 2030. The new trailer bill wouldn‘t give major productions a pass from these caps, but it would enhance the perks for productions that choose to monetize a portion of their tax credits rather than put them towards their tax liability.

(The ability to monetize a portion of the tax credits is relatively new, having been signed into law in 2025). The bill allows production to monetize 95 percent of their refund, as opposed to the previous 90 percent, and speeds up the collection period from five to two years.

The bill additionally would push back the expiration date for credits earned before 2025‘s changes to the program for productions actively shooting in California.

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Productions recently awarded California tax credits would have 15 years to use them, rather than the previous nine. The trade organization for major studios and streamers, the Motion Picture Association, supports the bill alongside the Entertainment Union Coalition and the Producers Guild of America.

The introduction of AB/SB 186 follows a major lob As of August 14, some 350,000 letters had been sent to legislators airing industry members‘ concerns about what the state budget bill could mean for production in the state.

While Zbur Overview & Context

While Zbur and Allen‘s bill addresses concerns over productions realizing the full value of their credits, it may not do much to restore trust in policymakers‘ approach to the state‘s film incentives program. Stakeholders have expressed concern that the sudden change to the program implemented this year could scare companies seeking stability and certainty as they make long-term production plans.

Now, legislators will have to scramble to pass the bill before the legislative session adjourns on August 31. “I’m pleased that we have identified a path forward that would help protect the progress we’ve made to strengthen California’s film and television industry,” Assemblymember Zbur said in a statement.

He added of the bill, “It does not address every challenge facing this highly competitive and mobile industry, and there is more work to do in the coming months, but this is an important step toward ensuring film and television remain a cornerstone of California’s economy.”