AB 1138: Income and corporate taxes: tax credits: motion pictures.

Official summary

Legislative Counsel’s Digest (official, as of the latest version). Written by nonpartisan legislative staff; reproduced verbatim.

(1)The Personal Income Tax Law and the Corporation Tax Law allow various credits against the taxes imposed by those laws, including various motion picture credits, commonly referred to as motion picture credit 1.0, 2.0, 3.0, and 4.0, and the certified studio credit, to be allocated by the California Film Commission in differing amounts equal to specified percentages of the qualified expenditures of a qualified motion picture in this state. Existing law allows a qualified taxpayer, if a motion picture credit exceeds the taxpayer’s tax liability, to elect to assign a portion of the credit to one or more affiliated corporations for each taxable year in which the credit is allowed, as specified.

This bill, if a qualified taxpayer is a single member limited liability company that is disregarded for tax purposes, would additionally allow that qualified taxpayer to elect to assign any portion of a motion picture credit to one or more affiliated corporations, as specified. The bill, for purposes of the motion picture credit 3.0 and 4.0, and for purposes of the certified studio credit, would also expand the definition of a qualified taxpayer to include a single member limited liability company that is disregarded for tax purposes.

(2)Existing law allows a motion picture credit (motion picture credit 4.0) to be allocated by the California Film Commission on or after July 1, 2025, in an amount equal to 20% or 25% of qualified expenditures for the production of a qualified motion picture in this state, and limits the aggregate amount of the credit that may be allocated for a fiscal year to $330,000,000, as specified. Existing law allows the California Film Commission to increase the credit amount allocated to a qualified taxpayer if specified conditions are met, including if the qualified taxpayer submits a diversity workplan that is broadly reflective of California’s population in terms of race, ethnicity, gender, and disability status, and a final diversity assessment that includes specified data. Existing law defines a “qualified motion picture” for purposes of these tax credits to include a motion picture that is produced for distribution to the general public that includes, among other productions, a feature with a specified minimum production budget, an independent film, a new television series produced in California, as specified, or a television series that relocated to California. Existing law allows a qualified taxpayer to elect to be paid a refund equal to 90% of the total refundable amount, as specified, if the amount allowable as a credit under the motion picture credit 4.0 exceeds the qualified taxpayer’s tax liability for the taxable year, and allows the excess to be carried over, as specified.

This bill, with respect to motion picture credit 4.0, for taxable years beginning on or after January 1, 2025, would revise the definition of qualified motion picture to include live action and animated series with episodes averaging 20 minutes or more, animated films, and large-scale competition shows, as specified. The bill would specify that a television series that completed principal photography on the previous season more than 48 months prior to applying for an allocation of this credit is considered a new television series for purposes of the definition of qualified motion picture, unless certain conditions are met. The bill would increase the credit amount allowed for a qualified motion picture to 35% or 40%, as specified. The bill would additionally increase the amount of qualified expenditures the California Film Commission is allowed to consider when determining the credit amount allocated to a qualified motion picture. The bill would include veteran status and ZIP Code in the diversity workplan and final diversity assessment. The bill would increase the aggregate amount of credits that may be allocated in a fiscal year to $750,000,000, and would revise the allocation limitations for specified qualified motion pictures within that aggregate amount. The bill would additionally correct erroneous cross-references in those provisions. By requiring additional moneys to be paid from the Tax Relief and Refund Account, a continuously appropriated fund, the bill would make an appropriation.

(3)Existing law also allows a credit for taxable years beginning on or after January 1, 2022, and before January 1, 2032, in an amount equal to 20% or 25%, or as modified, of qualified expenditures paid or incurred during the taxable year by a qualified motion picture produced in this state at a certified studio construction project. Existing law requires a qualified motion picture, for purposes of this credit, to provide a diversity workplan that includes goals broadly reflective of California’s population, in terms of race, ethnicity, gender, and disability status.

This bill, with respect to the certified studio credit, for taxable years beginning on or after January 1, 2025, would revise specified provisions of the definition of qualified motion picture, the credit amount allowed for a qualified motion picture, and the total credit amount allowed to be allocated to a television series, as specified, in conformity with the motion picture credit 4.0, as described above. The bill would also end the requirement that a certified studio construction project is produced by a qualified taxpayer that either owns more than 50% of the soundstage or soundstages on which the production is filmed or entered into a contract or lease of 10 years or more. The bill would require the diversity workplan to also include veteran status, and to indicate specified ZIP Code data related to members of the workforce.

Sponsors

Sponsors by party (alphabetical): Democratic 25 · Republican 2

“Support” is shown only as formal sponsorship recorded by the legislature. Roll-call votes are available on the official bill page.

Recent official actions

1. July 3, 2025Chaptered by Secretary of State - Chapter 27, Statutes of 2025.
2. July 3, 2025Approved by the Governor.
3. July 3, 2025Enrolled and presented to the Governor at 11 a.m.
4. July 3, 2025Urgency clause adopted. Senate amendments concurred in. To Engrossing and Enrolling. (Ayes 69. Noes 1.).
5. July 3, 2025Assembly Rule 63 suspended.
6. July 3, 2025In Assembly. Concurrence in Senate amendments pending.
7. July 3, 2025Read third time. Urgency clause adopted. Passed. Ordered to the Assembly. (Ayes 32. Noes 2. Page 1918.).
8. July 1, 2025Read second time. Ordered to third reading.
9. June 30, 2025From committee: Do pass. (Ayes 6. Noes 0.) (June 30).
10. June 26, 2025From committee: Do pass and re-refer to Com. on APPR. (Ayes 5. Noes 0.) (June 26). Re-referred to Com. on APPR.
11. June 24, 2025From committee chair, with author's amendments: Amend, and re-refer to committee. Read second time, amended, and re-referred to Com. on REV. & TAX.
12. June 23, 2025From committee chair, with author's amendments: Amend, and re-refer to committee. Read second time, amended, and re-referred to Com. on REV. & TAX.