On Monday, California Governor Gavin Newsom signed a bill into law that prolongs the state’s tax incentive for film and TV production, which amounts to $330million. This extension will be effective for five more years, ensuring the program remains in place until 2030.
The newly enacted legislation means taxes will be credit refundable. This means that companies like Netflix, even if they have minimal or no state tax liability, will be eligible to receive cash refunds from the state. This modification is estimated to result in an expenditure of approximately $200million.
The bill is the culmination of over a year of negotiations between Hollywood studios, entertainment unions, and state lawmakers. Aside from extending the tax credit, the legislation also includes an additional incentive to promote diversity in the entertainment industry. Productions will be encouraged to hire a diverse workforce, both in front of and behind the camera, aiming to foster inclusivity and representation.
In response to the tragic 2021 Rust shooting incident in New Mexico involving actor Alec Baldwin, the new legislation in California introduces gun safety requirements applicable to all productions within the state.
Just four days prior to this development, Governor Phil Murphy of New Jersey signed a bill that significantly expanded the state’s incentive program for production infrastructure. The new laws, in part, are intended to support Netflix in establishing a new production centre at Fort Monmouth, a decommissioned Army base.
Netflix’s plans involve the acquisition of 300 acres of land at the site and an investment of $850 million to convert it into a studio containing 12 stages. Additionally, Lionsgate has voiced interest in establishing a new studio facility in Newark, which could also benefit from the expanded incentive offered by the bill in New Jersey.
Under the new regulations, New Jersey’s incentive cap will be lifted from $350m annually to $400m. The incentive for production companies leasing New Jersey studios will also increase from $100m to $250m a year.
