Candidate Proposed Higher Film Tax Credits
The plan aims to boost California production by increasing tax credits and removing funding caps for film studios.
Updated on Oct. 14, 2026 in Manufacturing
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Republican gubernatorial candidate Steve Hilton has unveiled a proposal to increase the state production tax credit to 40 percent and remove the existing $750 million program cap. The policy seeks to revitalize the industry after California lost 52,000 production jobs over the last four years.
Why it matters
The proposal addresses regional competitive pressure and high vacancy in local infrastructure, as Los Angeles soundstages currently sit at a 62 percent occupancy rate. Operators are watching to see if these shifts would mitigate the current decline in local studio activity.
The plan replaces current 35 percent below-the-line credits with a 40 percent credit, while removing the $750 million program cap that governs state film incentives. These measures follow a period where California lost 52,000 production jobs.
The players
Steve Hilton
A Republican candidate for governor of California advocating for changes to state tax incentive structures.
Gavin Newsom
The current Governor of California who approved state-level soundstage construction funding in 2021.
The details
The proposal shifts from periodic application windows to a system of continuous rolling approvals to expedite production start times. It also includes a five-year sales tax exemption on materials used for studio construction to encourage infrastructure investment. This plan acts as a state-level counterpart to federal proposals currently circulating in Congress that aim to provide a 20 percent tax credit on domestic labor costs.
Timeline
2021: Governor Newsom approved $150 million in soundstage construction incentives.
Last four years: California experienced a loss of 52,000 production jobs.
September 2026: A federal film incentive bill was introduced in Congress.
October 14, 2026: Steve Hilton released his expanded production plan.
Market Landscape
The proposal modifies the existing California film and television production tax credit program by increasing the available credits and removing the funding cap. This move follows a period of stagnation in the industry, marked by a 62 percent occupancy rate at Los Angeles soundstages.
Studio operators and production companies should monitor the potential for rolling approval processes to influence short-term capacity planning. Consult with your tax counsel to track how proposed changes to credit caps and sales tax exemptions on construction materials could impact your long-term capital budget.
The takeaway
The proposed plan highlights a shift toward continuous approval models to counter regional job losses and low infrastructure utilization. Operators should track the status of state legislative funding discussions to determine the timing of any potential changes to their credit eligibility.
Further reading
For more on industry shifts, see our coverage of Manufacturing.
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Do you support using state tax incentives to keep private companies from leaving your area?
