California lawmakers have enacted two important bills—one that increases the state’s tax incentive for film and TV, and another that expands its purview to include animation for the first time. And local creatives are celebrating. 

Bill AB 1138 was passed yesterday, opening up the state’s tax credit beyond live-action projects to also cover animated films, series and shorts. This approval comes one day after Governor Gavin Newsom signed into law the related increase in the state’s tax credit from US$330 million to US$750 million. And both bills were enacted just days before a July 7 application deadline for productions to tap into the expanded credit. 

California-based producers are hopeful that these changes could mean more greenlit productions and work returning to the state. 

The credit expansions will “make a big difference in the overall health of the film and television industry in California,” says Ellen Goldsmith-Vein, founder and CEO of The Gotham Group (The Spiderwick Chronicles, The Maze Runner). “Now we have the tools to make significant improvements to our funding system for projects of all sizes, and that is a singular achievement of which we can all be proud.”    

Nonprofit FilmLA, which tracks productions in the state, revealed in January that the number of on-location shoot days in LA declined 5.6% in 2024 (to 23,480). Doubling the amount of total support the credit is able to give could go a long way in making California competitive again with other states, says Philip Sokoloski, VP of integrated communications at FilmLA. 

“This doesn’t just benefit live-action or animation studios. This could also help bring work to local post-production companies,” he says. “This isn’t good just for on-location shooting, but all facets of the business.” 

Sokoloski expects to see more regulations introduced around how big a funding piece animation will get, but he says this is a good start to getting LA, a birthplace of the media industry, back on top. “It means people can get started right away, have new money, and get back to work quickly,” he explains. “It should have been done earlier so LA’s industry would be in a better place.”

Ben Kalina, COO and an executive producer at Titmouse (StuGo, Spider-Man: Across the Spider-Verse), agrees that the expansions are solid steps in improving the state’s production landscape. But it won’t be a fix-all, since the industry is still reeling from last year’s strikes and seems to have less money to go around overall, he notes. 

“Over the last two years, we’ve seen a notable reduction in the number of greenlit projects, but I don’t think it’s entirely based on work leaving LA,” he says. “We have a studio in Canada and have seen that the Canadian animation industry is dealing with similar, if not worse, issues. I do think this credit would help more projects get greenlit for production, as it seems that content budgets are where things have tightened up.” 

Titmouse Foundation, the LA studio’s nonprofit charity, has been lobbying for the tax credit to support animation. In May, it teamed up with The Animation Guild, the BRIC Foundation and CVL Economics to release a report breaking down California’s fall from its position as a previously thriving animation production hub. 

Kalina is optimistic that the improved tax credits will help right the state’s animation industry. 

“Having a tax credit that is dependent on a geographic region means that that work has to happen there, so this would be a great way to increase the amount of work in LA.”

Image courtesy of Caleb George via Unsplash.