In July 2025 California more than doubled the annual cap on its film and television tax credit, from $330 million to $750 million, and widened the list of productions eligible to claim it. The first full fiscal year under the expanded program closed on June 30. The state has now published what it bought.
Across the year, Program 4.0 awarded credits to 170 projects representing roughly $6.6 billion in direct production spending inside California and about $4.3 billion in qualified expenditures, a figure that includes wages. Since the expansion took effect, 147 film and television productions have been approved for incentives, a 53% increase over the comparable ten-month stretch a year earlier.
The share numbers tell the story more plainly than the dollar totals. In the first quarter of 2026, credit recipients accounted for 21.8% of all feature film shoot days nationally and 33.7% of shoot days in the television drama category. Titles in the program include a Searchlight feature, projects at Netflix and Amazon MGM Studios, a Fox reboot, and returning seasons of network dramas.
The competition is the point
California did not expand its program in a vacuum. It expanded because it was losing.
For most of the last decade the trend line ran outward — to Georgia, to Britain, to Canada, to anywhere offering a better return on qualified spend. Data from early 2026 suggests the outflow of American production to other countries has at least stabilized. It has stabilized, however, inside a shrinking market: greenlights on high-budget productions continue to fall worldwide, which means more jurisdictions are now competing for a smaller number of shoots.
New York responded by raising its own cap to $800 million, with $100 million carved out for independent productions and a 30% base credit, plus additional uplifts for scoring work done in state and for shoots in upstate counties.
Georgia remains the structural outlier: no annual cap, fully transferable credits, a 20% base with a 10% bump for productions carrying the state logo in their credits, and a reinstated post-production credit that took effect in January. Illinois raised its base credit to 35% under legislation signed in December 2025 and extended the program well into the 2030s. Louisiana restructured rather than sunsetting, cutting its annual cap to $125 million while removing per-project and per-person limits entirely. Iowa and Wisconsin re-entered the market with 30% programs.
Thirty-nine states plus the District of Columbia and Puerto Rico now run active incentive programs, returning somewhere between 15% and 45% of qualified spend.
The federal change nobody advertised
One quieter development reshaped the math for every production in the country. As of January 1, 2026, Section 181 of the Internal Revenue Code — the federal provision allowing immediate expensing of production costs — sunset for any production that had not begun principal photography by the deadline.
That removed the most widely used federal tool for reducing effective production costs and pushed the entire financing burden onto state programs. Productions that had been layering the federal deduction on top of state credits now have to rebuild their capital structures around state incentives alone. It is the single largest reason state caps became competitive weapons this year rather than routine budget line items.
The argument that never resolves
Film incentives remain among the most contested items in state budgeting. Critics point out that the jobs are temporary, that the credits are frequently transferable and therefore function as a subsidy to whoever buys them, and that independent analyses rarely find full revenue recapture.
Supporters point at $6.6 billion and a payroll. Both sides are describing the same program accurately. What has changed is that with Section 181 gone, states are no longer arguing about whether to compete. They are arguing about how much.
Source reporting: Office of the Governor of California, TheWrap, Wrapbook, industry incentive filings.