California Capped Corporate Tax Credits. Indie Films Would Be Exempt.

Assembly Bill 186 would also cost the state up to $170 million a year in tax revenue.

Independent film productions would be exempt from California's new cap on corporate tax credits under a deal reached by state lawmakers. A vote was set for Monday, August 31, 2026. The carve-out, written into Assembly Bill 186, follows months of lobbying by the entertainment industry, CalMatters reported in a story republished by LAist.

For a small independent shoot, the change is simple: its credit claim never runs into a ceiling built for large corporations. The bigger studios get something too, because the bill rewrites the program's plumbing:

• Some studios could claim credits above the cap as far as 15 years out, instead of the nine years current law allows.
• Companies that claimed credits under last year's expanded program could cash out up to 95% of the unused portion, up from 90%.
• The state would have to pay those refunds within two years, rather than five.

The state would give up as much as $170 million a year in tax revenue, per a legislative analysis of the bill cited by CalMatters.

The cap Hollywood wants out of is new. In July, Gov. Gavin Newsom signed a permanent limit on corporate tax credits, capping what large companies can claim at $5 million or 70% of their tax liability, whichever is higher. The budget outlook was poor and the pressure was on to draw more from corporations and billionaires, CalMatters reported.

It collided with the governor's own film program. The credit dates to 2009, and productions use it to offset part of their annual state tax bill. Last year, with the industry still absorbing the pandemic, the union strikes and the wildfires, Newsom pushed state leaders to double it to as much as $750 million a year.

Hollywood didn't take the cap quietly. Bryan Lourd, chief executive of the Creative Artists Agency, wrote to lawmakers in August 2026 and asked for the industry to be carved out of it. He warned that without a fix, the program keeping film and television work in California, and the jobs attached to it, would be put at risk.

The deal doesn't go that far, and the unions say so.

“It's fair to say that the unions and others were arguing for a full exemption,” Shane Gusman, who lobbies in California for SAG-AFTRA and the Teamsters, told CalMatters on Sunday.

Gusman called the outcome a compromise. Assemblymember Rick Zbur, a Democrat whose district takes in Hollywood and a co-author of last year's expansion, called it a starting point that would steady productions and workers and soften the new business tax limit. Lobbyists for studios including Skydance and Walt Disney backed it at a budget hearing on Sunday, August 30, 2026, and labor groups including SAG-AFTRA did too.

Lawmakers were set to take the proposal up Monday, August 31, 2026. Until that vote, July's cap stood as written.

Source: laist.com, retrieved September 5, 2026.