California receives film tax incentives for TV studio builds


State lawmakers voted to increase film and television tax incentives by an additional $ 330 million to increase the supply of studio facilities and halt production jobs that are leaving the state.

The California Senate and Assembly approved SB 144 Tuesday, which will address a shortage of sound stage space in the area that is already near full capacity. The measure also introduces diversity goals to address the lack of access to Hollywood for black workers and other marginalized groups.

The tax credit includes an increase in the current $ 330 million annual film tax incentive program – which runs through 2025 – and a new $ 150 million credit towards building audio stages.

The additional tax incentive funds are intended to fill a gap in the current tax credit program, which is caused, among other things, by the high number of recurring television programs that are tax-deductible as long as they are operated in the state. California also faces ongoing competition from New Mexico, New York, and other states offering tax incentives to attract film and television crews.

Governor Gavin Newsom is expected to sign the bill shortly, according to a statement by Senator Anthony Portantino (D-La Canada Flintridge) who supported the bill.

“Investing in the construction of sound stages and the creation of studios and locations is a critical addition to our efforts to increase filming at the Golden State,” Portantino said in the statement. “New stages will result in thousands of jobs, millions of dollars in wages and billions of dollars in economic benefits for California. “

Last year beneficiaries of the program included the Netflix film “Gray Man,” starring Ryan Gosling and Chris Evans, which, according to the California Film Commission, received a tax break of $ 20 million. When production resumed last summer after filming was forced to stop by a pandemic, several television productions moved to the state to take advantage of the incentives. Shows for streaming platforms such as Disney + and Amazon were also among the beneficiaries.

The new bill increases the available tax credits by $ 15 million each for each of fiscal years 2021-22 and 2022-23 for television series that are relocated to California. It also increases the credit line for recurring television series only by $ 75 million each of those two years.

The proposed $ 150 million audio stage incentive offers 20% or 25% credit to producers renovating or building audio stages for film and television projects. The stages must be certified by the California Film Commission.

And they must meet diversity goals for a workforce that reflects the California population in terms of race and gender.

Each series or film project can total a maximum of $ 12 million, and construction costs must exceed $ 25 million over a five-year period.

In addition, film producers must spend at least $ 7.5 million in qualified wages on filming on the soundstage and own more than 50% of the facility or have a lease or contract of more than 10 years.

The new incentive reflects some elements of New Mexico’s recently revised film tax incentives, which removed a cap on loans for studios that invested in local facilities. The incentives attracted Netflix and NBC Universal to decade-long, multi-billion dollar studio investment deals in Albuquerque.

The new California bill was supported by Portantino and co-written by Rep. Autumn Burke (D-Marina del Rey), Chairman of the Assembly’s Revenue and Taxation Committee, and Wendy Carrillo (D-Los Angeles).

In 2018, California extended the state’s film tax incentive program by five years to help stem the spate of runaway productions.

Under this $ 330 million program, producers can recoup up to 25% of their expenses – up to the first $ 100 million – in crew salaries and other expenses such as construction kits. Studios can then use the credits to offset California state tax liabilities. Salaries for stars and other so-called over-the-line production workers are not covered.

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