California’s Cocky Tax Credit: Why Sacramento Still Doesn’t Understand Indie Math

California’s Tax Credit Glow-Up Looks Good on Paper — But Indie Producers Aren’t Buying the Hype

California lawmakers are celebrating the largest expansion of the state’s film tax credit in its history — a jump from $330M to $750M annually, plus the long-awaited addition of refundability starting in 2025. The governor’s office calls it a major victory for job creation, crew retention, and “restoring Hollywood’s competitiveness.”

But what the hell does Gavin know about how our industry works? If you talk to real working producers, investors, or line producers actually budgeting films under $10M (accounting for 70-80% of annual productions in the USA), the reaction is… muted. Confused. Frustrated. In some circles, outright pissed.

Why?

Because while Sacramento believes this expansion solves the runaway production crisis, the people who actually model budgets for a living know this program is still years behind places like Georgia, New Mexico, and Arkansas — and fails to acknowledge how brutally California’s cost of living crushes an indie budget before a single scene is shot. And it’s not just about cost of living during production – if a state or territory attracts enough movies, then the crew and cast will follow. Which has happened in droves, but we’ll get to that.

California didn’t create a competitive program. They created a political showpiece.

The Lawmakers' Victory Lap Sounds Great — Until You Actually Do the Math

Here’s what California is bragging about:

• Annual tax credit pool nearly doubled to $750M

• Credits can now be refundable (finally useful to indies)

• Big studio and indie features can land 20–30% credits depending on category

• Expanded support for VFX, soundstages, relocating series, etc.

These are real improvements. For the first time in a decade, California feels like it wants to compete.

But here’s the quiet part they’re not saying out loud:

A 25–30% credit in California does not equal a 25–30% credit in Georgia or New Mexico because the underlying cost structures are wildly different.

In Georgia, your $5M goes further.

In California, your $5M looks like $3.3M the minute you start paying housing, parking, union fringes, and LA-based day rates.

The credit percentage is meaningless if the cash burns 40% faster.

California Still Operates Like Filmmakers “Want” to Shoot Here — Not That They Need To

This is the structural arrogance built into the policy. The state assumes that filmmakers prefer California, cast prefer California, and Crew prefer California. They assume investors will tolerate higher budgets, and a larger tax pool will fix the exodus. 

But reality is already proving the opposite.

Production is down.

Jobs are down.

Payroll is down.

Even L.A. locals are openly bidding for long-term work in Georgia, New Mexico, and across Canada because the jobs are there — and California’s are disappearing.

Meanwhile, Sacramento and Los Angeles legislators still act like Hollywood is a magnet people can’t resist. Spoiler: they can — and are — resisting.

Producers Aren’t Choosing California Because the Credit Doesn’t Fix the Real Problem

A producer financing a $5M elevated thriller today has to answer one question: 

Do we shoot where money goes further, or do we shoot where the politician says the industry “should” stay?

Georgia gives you up to 30% transferable, instantly monetizable credits.

New Mexico gives you refundable credits up to 40%.

Arkansas gives you 25–30% fully transferable credits with crew-based uplifts.

California gives you: 20–30% (maybe)... if you win the application queue (LMFAO)... If the annual pot isn’t oversubscribed (seriously?)... If you time the cycle perfectly. And if you’re willing to spend in a market where rent alone costs 44% more than Georgia.

That’s not industrial strategy. That’s wishful thinking dressed like policy.

And Let’s Talk About the Exodus — Because It’s Real

Crew members are relocating to Atlanta, Albuquerque, and Toronto permanently.

Actors are keeping apartments and filing taxes in Santa Fe and Atlanta because that’s where the jobs are. Editors, VFX artists, and post teams have gone remote and moved out of state entirely.

Production days in L.A. fell double digits, and many categories hit their lowest levels since 2020.

This isn’t a “temporary contraction.” This is a structural shift caused by competitive incentives elsewhere and a cost-of-living crisis in California that Sacramento refuses to price into its own program.

The Industry Isn’t Asking California to Be Cheap — Just Rational

Producers don’t need California to match Georgia dollar-for-dollar. They don’t need 40% rebates like New Mexico. They don’t need to suddenly become Arkansas-level aggressive. They need something simpler:

An incentive that acknowledges reality.

California doesn’t.

The state is building policy as if it’s still 2006 — as if infrastructure, talent, and prestige compensate for economics.

They don’t...

What a Competitive California Incentive Should Look Like

If California legislators truly wanted to match the way indie producers and financiers think, this is what the program would include:

1. A Sub-$10M Indy Tier at 35–40% Refundable

Budgets under $10M feel the cost-of-living pain the most, and remember, this represents over 70% of the annual productions!

A differentiated bracket could change the entire ecosystem overnight.

2. Regionalized Uplifts

California’s rural counties and secondary markets are far more affordable.

Rewarding productions that shoot outside L.A. would be a massive equalizer.

3. Guaranteed Slots (No Lottery Economics that Only Benefit Studios’ Patience)

Georgia works because certainty works. If you qualify, you get it.

California still makes filmmakers stand in line like they’re waiting for Space Mountain.

4. Acknowledgement of the Cost-of-Living Gap

There is no world in which a 25% CA credit = a 25% GA credit.

Pretending otherwise forces producers to shoot elsewhere.

Who Still Benefits Under the 4.0 Program

California does make sense for:

• Star-driven projects with cast who refuse to leave L.A.

• VFX-heavy shows needing L.A. post houses

• Shows relying on specialized crew density

• Productions tied to local marketing or California brand identity

But these are the exceptions — not the baseline.

Bottom Line

California didn’t build an incentive for indie filmmakers. They built a press release.

And if legislators keep refusing to acknowledge the simple economic truths of our industry, the state that once defined global filmmaking may continue losing the very people who made that legacy possible. If these politicians don't get their heads out of their asses, Hollywood may soon just be a sign on a hill.