California lawmakers are set to approve a measure that would shield independent film and television productions from a recently enacted cap on corporate tax credits. The change comes after sustained lobbying by entertainment companies worried that the limit could push more work out of the state.

The film tax credit program, established in 2009, allows production companies to reduce their state tax bills. Last year the program was expanded to as much as $750 million annually in an effort to retain jobs following the pandemic, strikes and other disruptions.

A separate law signed in July placed an overall ceiling on how much large corporations can claim in tax credits each year. Industry representatives argued that the ceiling would sharply reduce the value of film incentives for many productions.

Assembly Bill 186 would carve independent productions out of the cap. It would also let companies apply unused credits to future tax years, raise the cash-refund portion to 95 percent and require the state to pay refunds within two years instead of five.

Bryan Lourd, chief executive of Creative Artists Agency, warned in a letter that without the adjustment the state risked “destabilizing a program that is critical to keeping film and television production in California and the thousands of jobs it supports.”

Assemblymember Rick Zbur, a co-author of last year’s expansion, said the legislation would “provide greater stability and certainty for productions and workers, mitigate the impacts of the business tax credit limitation, and help us continue competing for jobs and investment.”

The changes are projected to reduce state revenue by as much as $170 million a year. Lobbyists for studios and unions including SAG-AFTRA backed the compromise during hearings. Shane Gusman, a lobbyist for SAG-AFTRA and the Teamsters, described the outcome as sufficient to keep the program functioning, according to LAist.

This report is based on coverage by LAist: https://laist.com/news/arts-and-entertainment/hollywood-california-tax-break-independent-films