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.

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. For a small independent shoot, the arithmetic gets simpler. Its credit claim never runs into a ceiling built for large corporations.

California's film tax credit dates to 2009. Productions use it to offset part of their annual state tax bill, and the state uses it to stay competitive with cheaper places to shoot.

Last year, with the industry still absorbing the pandemic, the union strikes and the wildfires, Gov. Gavin Newsom pushed state leaders to double the program to as much as $750 million a year in credits.

Then came the other half of the governor's agenda: in July he 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, the outlet reported.

Hollywood didn't take that 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 the cap. 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.

Assemblymember Rick Zbur, a Democrat whose district takes in Hollywood, co-authored last year's expansion. He called the deal a starting point. It would steady productions and workers and soften the new business tax limit, he said in a statement.

The bill rewrites the program's plumbing as well:

• 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.

Lobbyists for motion picture studios including Skydance and Walt Disney backed the deal at a budget hearing Sunday, August 30, 2026. Labor backed it too, including the Screen Actors Guild-American Federation of Television and Radio Artists.

Shane Gusman, who lobbies in California for SAG-AFTRA and the Teamsters, called the outcome a compromise.

“It's fair to say that the unions and others were arguing for a full exemption,” Gusman told CalMatters on Sunday.

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

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