Hollywood Jobs: Newsom Signs $10 Million Post-Production Tax Credit as California Battles Production Flight

California creates its first standalone incentive for editing, visual effects, sound and other post-production work as the state tries to compete with rival production hubs

LOS ANGELES | California is putting another $10 million behind its effort to keep Hollywood jobs at home.

Gov. Gavin Newsom signed AB 2319, creating California's first standalone tax credit dedicated to post-production work as the state attempts to counter the migration of film and television jobs to competing states and overseas production centers.

The incentive is expected to launch with $10 million and will provide credits covering 35% to 50% of qualifying expenses for post-production work performed in California, including editing, sound, music, visual effects and finishing.

The size of the program is considerably smaller than what industry advocates originally sought. Supporters, including the Motion Picture Editors Guild and California Post Alliance, had pushed for $100 million.

Still, the measure changes an important part of California's incentive strategy: A movie or television production will not have to shoot in California to qualify for the standalone post-production credit.

That opens the door for projects filmed elsewhere to bring editing, visual effects and other finishing work back to California.

CALIFORNIA TARGETS POST-PRODUCTION JOB LOSSES

The legislation arrives as California faces increasingly aggressive competition for entertainment work from other states and countries.

New York, New Mexico and New Jersey are among states offering incentives that can support post-production work, while international production centers including the United Kingdom, Canada, Australia and Spain have used incentives to attract entertainment spending and jobs.

California's share of U.S. post-production employment has fallen from 53% to 42% over the past 13 years, according to economic research cited by the California Post Alliance.

The state had about 12,000 post-production jobs last year.

Assemblymember Nick Schultz, D-Burbank, authored AB 2319 and has positioned the measure as a first step toward strengthening California's competitiveness.

“This is a big victory in our fight to save California's entertainment industry, and we're just getting started,” Schultz said.

The Legislature approved the final version by wide margins, with the Assembly voting 72-2 and the Senate 33-5.

$10 MILLION PROGRAM FOLLOWS $750 MILLION HOLLYWOOD EXPANSION

The new post-production incentive complements California's much larger Film and Television Tax Credit Program, which was expanded from $330 million to $750 million annually last year.

That existing program already allows certain post-production expenses to qualify, but productions generally must meet California spending or filming requirements.

AB 2319 creates a separate path specifically for post-production, potentially allowing California to capture part of a project's economic activity even when principal photography takes place somewhere else.

The distinction could become increasingly important as states and countries compete not only for soundstage production but also for the specialized jobs that continue long after filming ends.

California says 170 projects awarded incentives during the first year of its expanded Film and Television Tax Credit Program are expected to generate about $6.6 billion in economic activity and nearly 35,000 cast and crew jobs.

LABOR PROVISIONS SHAPE NEW INCENTIVE

Labor protections became an important part of negotiations over AB 2319.

Post-production includes heavily unionized crafts such as editing but also visual effects, where significant portions of the workforce remain nonunion.

The legislation was amended to direct 85% of funding toward jobs providing union-level wages and benefits, addressing concerns that public incentives could subsidize positions paying below established industry standards.

Scott George, national executive director of the Motion Picture Editors Guild, called the legislation a significant development for California entertainment workers.

The guild argues that the standalone credit gives productions that shoot elsewhere a financial reason to return to California for post-production.

The California Post Alliance also backed the legislation and has indicated it intends to seek additional funding for the program.

NEWSOM SIGNS SECOND HOLLYWOOD TAX CREDIT MEASURE

Newsom also signed SB 186, another measure aimed at strengthening California's entertainment incentive system.

The legislation enhances the refundability of film and television tax credits and exempts certain independent productions from temporary limitations on business tax credits beginning in 2027.

It also accelerates the period over which qualifying refundable credits can be recovered.

The entertainment industry had sought broader relief from California's corporate tax-credit limits but did not secure a complete exemption.

Together, AB 2319 and SB 186 expand California's strategy beyond simply attracting cameras and production crews.

The state is increasingly competing for the entire entertainment-production pipeline — from principal photography through editing, sound, visual effects and final delivery.

For Hollywood's post-production sector, however, the immediate question will be whether $10 million is enough to meaningfully influence where studios and producers place that work.

The original $100 million proposal illustrates the gap between the program industry advocates wanted and the one California ultimately approved.

That makes the new incentive both a policy change and an early test: whether a relatively small standalone credit can begin reversing California's loss of post-production work — and whether lawmakers will be willing to expand it if demand exceeds the initial allocation.

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-- By Michael R. Thomas

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