Governor Gavin Newsom Unveils Plans to Boost Hollywood Tax Credits

Hollywood’s Reliance on the Film Industry

The proposed tax changes would provide a boost to the local economy after the 2023 actors’ and writers’ strikes derailed a slate of high-profile productions. The local film and television industry employs 618,000 people and contributes $115 billion to the local economy, indicating the high stakes of the proposition.

Hollywood’s impact on culture has been immeasurable. For over a century, the city has been the global capital of entertainment, setting the standard for high production values. Its impact can even be seen in the gaming industry, with many of Paddy Power’s online slots featuring cinematic visuals, special effects, and adaptations of Hollywood blockbusters. For example, Jumanji – The Bonus Level Live and Gladiator: Mega Cash Collect are based on the Hollywood classics and showcase their ongoing popularity.

With Hollywood’s position as a global leader in peril, Newsom’s plans could revitalize the once thriving but now struggling industry.

Gavin Newsom’s Plan Revealed

Recently, the California Governor proposed to improve California’s competitive position in the film industry by increasing its tax credit limit by more than double. Taking effect on July 1, 2025, the current cap of $330 million would be increased to $750 million, providing an additional $3.75 billion in credits over five years.

This would make the state one of the nation’s most generous producers. “This means that film production can stay,” says Los Angeles Mayor Karen Bass. “It means that all of the jobs that would be lost, because they would go to another state or overseas, would stay here.”

While the struggling film industry wasn’t addressed in the 2024-2025 California state budget, California spent more than $3 billion last year to keep productions local after the strikes. Over the past 20 years, states such as Georgia and New York have introduced lucrative tax schemes to entice producers, with Georgia offering more than $5 billion and no credit caps over the past nine years.

Promising Future Ahead

Credits: Pixabay

Despite the difficult years in Hollywood, local activists and businesses are collectively working together to get Hollywood’s productions back on track. Mayor of Los Angeles Karen Bass has formed a task force to promote industry recovery, while deputy mayor for business and economic development Rachel Freeman says over 8 million square feet of new soundstage will be built.

Industry analysts believe that the proposal will be a critical yet effective measure to preserve California’s role as a global leader in content production. Producers, some claim, will always choose the most cost-effective option, and considering the state’s wealth of production infrastructure and unmatched talent pool, Hollywood remains the most attractive option.

With just over six months to go until the proposed tax reforms take place, the entertainment industry waits in anticipation for the measure to be passed. Thanks to careful intervention from local and state governments, Los Angeles’ dry spell looks to be coming to an end.