California Legislature Passes AB/SB 186 to Shield Film and TV Jobs from New Tax Credit Cap

When California’s film and TV industry faced a looming tax‑credit squeeze, lawmakers pulled the plug on a cap that threatened to choke production jobs. On September 1, 2026, the state Senate and Assembly approved AB/SB 186—a budget‑trailer bill that removes the impact of the recently enacted SB 122 on the Film & TV Tax Credit Program. The measure, introduced by State Senator Ben Allen (D‑Santa Monica) and Assemblymember Rick Chavez Zbur (D‑Hollywood), is designed to preserve middle‑class jobs linked to production activities in Los Angeles and across the state.

SB 122, passed in June 2026, imposed a $5 million cap on business tax credits that applies through 2029. Lawmakers argued the cap unintentionally limited the Film & TV Tax Credit Program, which had already been expanded under the California Film & Television Jobs Act signed by Governor Gavin Newsom in 2025. The cap could have caused projects that had already secured credits to lose eligibility or to receive reduced refunds.

AB/SB 186 addresses the issue in three ways. First, it exempts independent productions from the SB 122 cap, allowing them to claim the full amount of credit available under the program. Second, it reduces the discount on refunds in the 4.0 program from 10 % to 5 % and shortens the payout period from five years to two years, making the incentive more immediate for producers. Third, it protects unused credits earned under the earlier 2.0 and 3.0 programs from premature expiration if a company has a project awarded under the 4.0 program.

The bill’s passage follows the 2025–2026 fiscal year, during which the Film & TV Tax Credit Program awarded credits to 170 new projects. According to program data, that first year generated an estimated $6.6 billion in economic activity and created nearly 35,000 jobs statewide. The expansion of the program’s annual cap to $750 million, along with increased credit amounts and broadened eligibility, was credited with revitalizing the state’s entertainment sector.

Sen. Allen said the legislation was necessary to keep California’s momentum in the global entertainment market. "Last year we took action to get families back to work and jumpstart the state’s film and television industry," he said in a statement released after the bill’s approval. He added that without the measure, the industry could lose jobs and the state could lose its competitive edge.

Assemblymember Zbur highlighted the bill’s role in protecting independent productions, which are a significant source of local employment. "The 4.0 program is designed to support projects that may not qualify for larger credits, and this bill ensures they can continue to operate without the risk of losing their incentives," he said.

The California Film Commission, which administers the tax‑credit program, welcomed the legislation. Director Colleen Bell noted that the changes would help producers plan long‑term and maintain the state’s position as a preferred filming destination.

Industry groups, including the Motion Picture Association and the Entertainment Workers Union, have praised the bill as a necessary safeguard against the unintended consequences of SB 122. The union’s local chapter celebrated the passage, noting that the measure would save hundreds of members’ jobs.

The bill now moves to the Governor’s desk for signature. If signed, it will take effect immediately, ensuring that the film and television industry can continue to benefit from the expanded tax‑credit program without the constraints imposed by SB 122.

The legislation is part of a broader effort by California officials to maintain the state’s status as a global entertainment hub. The passage of AB/SB 186 is expected to stabilize the industry’s workforce and support continued economic activity in the sector.