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AB 2319

Personal Income Tax Law: Corporation Tax Law: credits: qualified motion picture: post-production.

2025-2026 Regular Session Introduced by Nick Schultz

California creates a new postproduction tax credit (35-50%) for in-state postproduction expenditures to keep postproduction work and jobs from moving out of state.

Read third time. Passed. Ordered to the Senate.
#corporationtaxlaw #personalincometaxlaw #credits #qualifiedmotionpicture #post-production
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WeVote Research Nonpartisan
Bill Summary · AB 2319

Summary of AB 2319 (2025-2026) – California Postproduction Tax Credit

Note: This summary covers the bill as introduced/amended in the 2025-26 session and reflects the provisions described in the bill text.

1) Purpose and intent

  • Create a new postproduction-only tax credit for qualified motion pictures produced or postproduced in California.
  • Address a gap in California’s incentives by targeting postproduction activities that currently occur outside California, aiming to keep and grow postproduction jobs and spending in-state.
  • Complement the existing California Motion Picture Tax Credit programs (4.0 and related credits), not replace them.
  • The bill frames the incentive as a tool to maintain California’s competitiveness with other jurisdictions that offer postproduction incentives.

2) Key provisions and changes

  • New credits created:

    • Section 17053.98.5 (Personal Income Tax Law and related credits) and Section 23698.5 (Corporation Tax Law) establish a postproduction credit for qualified motion pictures.
    • Eligible credits range from 35% to 50% of qualified postproduction expenditures in California, allocated by the California Film Commission (CFC).
    • The credit is available for taxable years beginning on or after January 1, 2027, with allocations scheduled 2027–2032 and beyond per annual cap and category rules.

  • Eligibility and definitions:

    • A “qualified motion picture” includes features, miniseries/limited series, pilots, ongoing series, or large-scale competition shows with minimum budgets (generally $1,000,000 per project or per episode for certain formats).
    • Postproduction activities must occur in California and meet specific in-state expenditure thresholds (e.g., at least 75% of postproduction costs incurred in-state; specific wage and property-use criteria).
    • Postproduction is defined broadly (editing, Foley, ADR, sound design, scoring, music recording, color, etc.) but excludes manufacturing/shipping prints or analogous activities.

  • Credit calculation and limits:

    • The credit amount equals a combination of:
    • 35% of qualified postproduction expenditures (editorial/postproduction in-state).
    • Up to an additional 15% tiered in-state enhancements (e.g., five percent for non-Los Angeles postproduction, ten percent for in-state wages outside LA, fifteen percent for music scoring).
    • Cap on qualified expenditures per motion picture (up to $6,000,000 for non-visual-effects components and up to $6,000,000 for visual effects).
    • The total award is capped by a credit certificate issued by the California Film Commission (CFC).

  • Administration and eligibility requirements:

    • CFC ranks and allocates credits across categories (features/independent/animated vs. television series and related formats).
    • A diversity workplan is required to qualify for up to an additional 4% credit, contingent on interim and final diversity assessments and compliance with a diversity checklist.
    • The bill requires reports to Legislature on diversity metrics and postproduction incentives, and provides data-sharing provisions with the Legislative Analyst’s Office (LAO) and tax agencies.

  • Refundability and transferability:

    • Tax credits under this program may be refundable in certain cases:
    • Qualified taxpayers may elect to receive refunds during the refundable period, subject to annual and total refundable amounts defined in the bill.
    • Unused credit can be carried forward; there are also provisions for selling credits (especially for independent films) to unrelated parties, with restrictions and reporting requirements.

  • Timing and implementation:

    • Effective for taxable years beginning on or after January 1, 2027.
    • Allocations occur in four or more periods per fiscal year starting after July 1, 2027 and through 2032, with options to adjust allocations based on funding gaps and program needs.
    • Several regulatory and reporting requirements to be established by the CFC and Franchise Tax Board.

3) Who/what is affected

  • Qualified taxpayers producing or postproducing eligible motion pictures in California (including corporations, personal service entities, and certain pass-through entities).
  • California Film Commission (administers the allocation and certification process).
  • Franchise Tax Board (administers the credits for the personal and corporate tax sides and handles transfer/sale of credits).
  • Industry participants: postproduction workers, editors, sound designers, music composers/performers, and other California-based postproduction professionals.
  • Eligible recipient projects: those that meet the defined thresholds and comply with diversity, wage, and in-state expenditure requirements.

4) Procedural and timeline aspects

  • Legislative findings emphasize California’s need to retain postproduction work domestically and to counter out-of-state competition.
  • The bill provides a phased implementation timeline:
    • Credits start in 2027; allocations are annually capped and categorized.
    • Regulation development and administrative rules by the CFC and FTB, with gubernatorial input on regulatory actions.
  • Reporting requirements:
    • Annual diversity data and program effectiveness reports to the Legislature (LAO and policy committees).
    • Public disclosure provisions by the CFC, while maintaining confidentiality protections for tax information.
  • Sunset/continuation considerations:
    • The bill includes mechanisms for adjustments if credits are underfunded or oversubscribed, including reallocation between categories and potential changes in timing.

Note: This summary aims to present the bill’s substantive elements clearly. For compliance, stakeholders should review the full bill text and any amendments, as well as draft regulations and fiscal impact analyses.

Compiled from official sources — confirm details with the bill’s official record.

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