California Production Tax Incentives

Overview

  • California offers a partially refundable or transferable tax credit up-to 35% (base) depending on the type of project with additional uplifts available for VFX, out of zone filming, & hiring out of zone labor (maximum credit is 45%).
  • Currently ATL labor and all federal payroll taxes do not qualify.
  • Productions may begin qualifying expenses upon issue of Credit Allocation Letter (CAL) and ends 30 days after the creation of the final element. projects must be completed within 30 months of CAL date.
  • Projects may opt out of DEIA requirement but will receive a 4% reduction to their credit allocation. a set safety advisor is required, they must prepare and submit a final safety evaluation report at the conclusion of production.
  • Applicants with insufficient tax liability to make use of the certified tax credits may elect to utilize the refundability option at 90% of credit face value over 5 years.
  • California also offers the soundstage filming tax credit which incentivizes construction and renovation of soundstages in CA.
  • The program has a total of $150M in funds to allocate over a 10-year period (January 2022-December 2031).
  • Funds are issued on a first come, first served basis and capped at $12M/project.

Eligible project types:
Animation, competition shows, feature films, pilots, scripted TV

Incentive details

Type
Partially refundable tax credit (non-independent films), transferable tax credit (independent films)
Rate
35% for feature films, new TV series, mini-series, pilots, & independent films; 40% for relocating TV series.
Uplift(s)
5% for non-independent motion pictures/TV projects (excl. relocating TV): 1) with VFX expenditures totaling $10M+ in CA or at least 75% of total worldwide VFX expenditures are incurred in CA, or 2) with wages paid to individuals who live in the LA zone but perform services outside of the LA zone during original photography, or 3) for purchasing or renting tangible personal property outside of the LA zone and the personal property is used or consumed outside the LA zone. 10% for non-independent motion pictures (excl. relocating TV): with wages paid to individuals who live outside the LA zone and perform services outside of the LA zone during original photography (documentation required to validate residency). 5% for independent film or relocating TV (in 1st season in CA): with wages paid to individuals who live outside the lLA zone and perform services outside of the LA zone during original photography (documentation required to validate residency).
Annual Cap
$750M
Project Cap
$120M qualified expenditure maximum applies to all projects except independent films. $20M qualified expenditure maximum applies to independent films.
Compensation Cap
None
Eligible Expenses
BTL labor performed in California and non-payroll expenditures purchased or rented and used in California
Additional Info
Expenses incurred prior to CAL date, except costs related the production facility, office rentals, completion bonds, & insurance premiums (all to be pro-rated) are not eligible for the tax credit. Qualifying period begins with CAL date and ends 30 calendar days after the creation of the final element (which must be within 30 months from CAL date). Production must begin within 180 calendar days of CAL date (240 days if budget equals $100M or more). Approved projects must fulfill the career readiness program requirement and make a financial contribution to the career pathways training program (based on CAL amount). All final materials, including CPA audit report, are due within 48 months of the 30-month completion deadline. Animated films, live action series, & pilots must be a minimum of 20 minutes. Independent films are intended for commercial distribution with a budget of $1M+ and a running time of 75 minutes; independent films are produced by a company that is not publicly traded and publicly traded companies do not own, directly or indirectly, more than 25% of the producing company.

Requirements

Minimum Spend
$1M
Local Hire Requirement
75% of principal photography days & 75% of the total production budget must occur wholly in California.
Logo/End Credit Acknowledgement Required
Yes
Loanout Withholding
None
Application Timing
Phase I: applications are submitted electronically using the CFC portal during project specific category application windows; projects compete against other projects in their category and are ranked based on the "job ratio" formula. Phase II: projects that are ranked among the top 100% of jobs ratios in their category will be notified via email and then have 5 calendar days to submit materials to include: the budget, fringe matrix, one liner, script, detailed narrative, proof of financing, etc. CFC will notify applicants if they are accepted or rejected within 45 calendar days of receipt of the materials/completed application. Phase III: upon approval, CFC will issue a credit allocation letter (CAL).
Audit
CPA audit required

How to Apply

Application
Application Timing
California Film Office

Colleen Bell, Executive Director, 323-860-2960, filmca@film.ca.gov
California Film Commission | State of California

Helpful Links

Bill Status - AB-1138 Income and corporate taxes: tax credits: motion pictures.

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