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California lawmakers pass measure to adjust film tax credit rules following budget caps

The legislature approved SB 186 to speed up payouts and exempt independent films from corporate tax credit limits, sending the bill to Gov. Gavin Newsom.

Updated Sep 1, 2026 · 19:31 UTC2 reports

The short version

  • California lawmakers passed SB 186 to soften the impact of recent corporate tax credit caps on the state's $750 million film and television incentive program.
  • The bill fully exempts independent productions from the annual caps, speeds up credit monetization from five years to two years, and raises the monetization rate to 95 percent.
  • Gov. Gavin Newsom has until the end of September to sign or veto the measure, alongside a separate post-production tax incentive bill.

Key facts

  • The California state legislature passed SB 186 ahead of its end-of-session deadline on Monday night.[Variety · The Hollywood Reporter]
  • The bill addresses industry concerns over a $5 million annual cap on corporate tax credits enacted earlier in the summer under SB 122.[Variety · The Hollywood Reporter]
  • Under SB 186, independent productions are fully exempt from the tax credit caps, and productions can monetize 95 percent of their credits over two years instead of five.[Variety · The Hollywood Reporter]
  • The legislation extends the expiration timeframe for older non-refundable tax credits from nine years to up to 15 years.[Variety]
  • The legislature also approved AB 2319, which creates a separate tax incentive for post-production facilities and visual effects studios.[Variety]

What remains uncertain

  • Whether Gov. Gavin Newsom will sign or veto AB 2319 by the September 30 deadline remains unconfirmed, as he has not publicly taken a position on the measure.[Variety]

Sources