California legislators used the final hours of their 2026 session to fix a problem they created for themselves months earlier, passing a bill that shields movie and television productions from a corporate tax cap that threatened to gut the state’s expanded entertainment tax credit.
“Without this fix, we risk destabilizing a program critical to keeping film and television production in California,” said Bryan Lourd, CEO of Creative Artists Agency, one of several industry leaders who pushed lawmakers to act before adjournment.
Lawmakers passed Assembly Bill 186 just before midnight Monday, Aug. 31, sending it to Governor Gavin Newsom’s desk. He’s widely expected to sign it.
The bill exists because of a collision nobody in Sacramento seemed to plan for. Newsom signed California’s $750 million movie and TV tax credit expansion into law last year, then signed a separate corporate tax credit cap this July that limited how much of any credit a company could actually claim in a given year.
That cap, set at $5 million or 70% of a company’s tax liability, applies broadly across industries, but it landed hard on studios already counting on the bigger movie incentive.
Assembly Bill 186, authored by Assemblymember Rick Zbur, a Los Angeles Democrat, fully exempts independent movie and television productions from the corporate cap. Larger studio productions don’t get a full pass, but they gain real breathing room: the window to claim credits above the cap stretches from nine years to fifteen, unused credits become 95% refundable instead of 90%, and the state must pay out those refunds within two years rather than five.
“It’s fair to say that the unions and others were arguing for a full exemption,” said Shane Gusman, a lobbyist representing SAG-AFTRA and the Teamsters Union in California. “But we got enough so that the program will continue to work.”
Related: California Can’t Keep Business in Hollywood as Other States, Countries Swoop In
The fix isn’t free. State analysts project it will cost California up to $170 million a year in tax revenue it would otherwise collect.
Charles Rivkin, CEO of the Motion Picture Association, framed the tradeoff as necessary to keep productions from packing up for other states, saying the fix would help “maintain the program’s competitiveness so creators continue to make movies and shows in California.”
Lawmakers also passed a companion bill, AB 2319, creating a new postproduction tax incentive backed by $10 million, according to Variety.
Movieguide® has tracked this fight from the start. When the original expansion cleared committee back in April 2025, Entertainment Union Coalition President Rebecca Rhine said that “this funding and legislation is so critical to working families in California,” while state Senator Jerry McNerney, who chairs the Senate Revenue and Taxation Committee, warned that without it, “we’re losing quite a bit of ourselves.”
That warning captures what’s really at stake in a bill this wonky. Behind the tax code language are real production crews, grips, editors, and craftspeople whose paychecks depend on whether the next movie or show gets shot in Burbank or Vancouver.
Christian and family-friendly productions are part of that ecosystem too, and every incentive that keeps cameras rolling in California keeps those stories, and the families who make them, working at home. Sacramento didn’t get this right on the first try, but AB 186 is its attempt to make sure a good idea doesn’t quietly undo itself.
Read Next: Animated Movies Claim $71 Million of California Film Incentives
Questions or comments? Please write to us here.
