California passes partial film tax-credit carveout amid $5 million cap debate

California lawmakers have reached a deal on AB 186, creating a partial carve-out for the film and television industry from a three-year $5 million per-company tax-credit limit. The amendment follows criticism in June from the Motion Picture Association and the Entertainment Union Coalition that the ceiling would undermine Hollywood's recovery and the $750 million incentive budget. Under the new provisions, studios opting for cash refunds will see the repayment window cut from five years to two and the discount reduced from 10 % to 5 %.

Credits for independent productions, representing roughly 10 % of the program, are fully excluded from the cap. The measure also extends the lifespan of non-refundable credits issued before 2025 by up to five years to avoid expiration. Cast & Crew’s vice president of tax incentives, Kathleen Thompson, said the compromise meaningfully improves the situation. The bill now awaits approval from both legislative chambers by midnight on Monday.