City Council Meeting Agenda
June 23, 2025

AMENDED IN ASSEMBLY JUNE 2, 2025

AMENDED IN ASSEMBLY MAY 23, 2025

AMENDED IN ASSEMBLY APRIL 22, 2025

AMENDED IN ASSEMBLY MARCH 28, 2025

california legislature—2025–26 regular session

ASSEMBLY BILL No. 1138

Introduced by Assembly Members Zbur, Bryan, and Quirk-Silva (Principal coauthors: Senators Allen, Menjivar, Pérez, and Stern) (Coauthors: Assembly Members Ávila Farías, Caloza, Elhawary, Mark González, Harabedian, Lackey, McKinnor, Ortega, and Schultz)
(Coauthors: Senators Becker, Rubio, and Valladares)

February 20, 2025

An act to amend Sections 17053.98, 17053.98.1, 23698, and 23698.1 of the Revenue and Taxation Code, relating to taxation, and making an appropriation therefor.

legislative counsel’s digest

AB 1138, as amended, Zbur. Income and corporate taxes: tax credits:
motion pictures.

The
(1) The Personal Income Tax Law and the Corporation Tax Law allow various credits against the taxes imposed by those laws, including a motion picture credit (motion picture credit 3.0) for taxable years beginning on or after January 1, 2020, to be allocated by the California Film Commission on or after July 1, 2020, and before July 1, 2025, in an amount equal to 20% or 25% of qualified expenditures for the

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production of a qualified motion picture in this state, with additional credit amounts allowed, as specified.

This bill, with respect to motion picture credit 3.0, for taxable years beginning on or after January 1, 2025, would revise the definition of a qualified motion picture to exclude a pilot for a new television series that is longer than 40 minutes of running time, exclusive of commercials, that is produced in California, and with a minimum production budget of $1,000,000.

Existing law additionally allows a motion picture credit (motion picture credit 4.0) to be allocated by the California Film Commission on or after July 1, 2025, in an amount equal to 20% or 25% of qualified expenditures for the production of a qualified motion picture in this state, and limits the aggregate amount of the credit that may be allocated for a fiscal year to $330,000,000, as specified. Existing law defines a “qualified motion picture” for purposes of these tax credits to include a motion picture that is produced for distribution to the general public that includes, among other productions, a feature with a specified minimum production budget, an independent film, a new television series produced in California, as specified, or a television series that relocated to California. Existing law allows a qualified taxpayer to elect to be paid a refund equal to 90% of the total refundable amount, as specified, if the amount allowable as a credit under the motion picture credit 4.0 exceeds the qualified taxpayer’s tax liability for the taxable year, and allows the excess to be carried over, as specified.

This bill, with respect to motion picture credit 4.0, for taxable years beginning on or after January 1, 2025, would revise the definition of qualified motion picture to include live action and animated series with episodes averaging 20 minutes or more, animated films, and large-scale competition shows, as specified. The bill would specify that a television series that completed principal photography on the previous season more than 48 months prior to applying for an allocation of this credit is considered a new television series for purposes of the definition of qualified motion picture, unless certain conditions are met. The bill would increase the credit amount allowed for a qualified motion picture, picture to 35% or 40% 40%, as specified. The bill would additionally increase the amount of qualified expenditures the California Film Commission is allowed to consider when determining the credit amount allocated to a qualified motion picture. The bill would revise the allocations for independent films allocation limitations for specified qualified motion pictures within the aggregate amount of credits that

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may be allocated in a fiscal year. The bill would increase the amount a qualified taxpayer may elect to be paid as a refund to 100% of the total refundable amount of the allowable credit that exceeds the qualified taxpayer’s tax liability for the taxable year, as specified. The bill would additionally correct erroneous cross-references in those provisions. By requiring additional moneys to be paid from the Tax Relief and Refund Account, a continuously appropriated fund, the bill would make an appropriation.

Existing
(2) Existing law also allows a credit for taxable years beginning on or after January 1, 2022, and before January 1, 2032, in an amount equal to 20% or 25%, or as modified, of qualified expenditures paid or incurred during the taxable year by a qualified motion picture produced in this state at a certified studio construction project.

This bill, with respect to the certified studio construction project credit, for taxable years beginning on or after January 1, 2025, would revise specified provisions of the definition of qualified motion picture, the credit amount allowed for a qualified motion picture, and the total credit amount allowed to be allocated to a television series, as specified, in conformity with the motion picture credit 4.0, as described above.

The bill would also end the requirement that a certified studio construction project is produced by a qualified taxpayer that either owns more than 50% of the soundstage or soundstages on which the production is filmed or entered into a contract or lease of 10 years or more.

Existing
(3) Existing law requires the California Film Commission to develop an application process for the allocation of the above-described credits.

Existing law requires the issuance of a credit for any subsequent season for the life of a television series that has been approved and issued a credit allocation under any of the existing motion picture credits.

Existing law requires the California Film Commission to limit the amount of credits any recurring television series receives in subsequent seasons to no more than the amount reserved in the prior fiscal year it received the credit.

This bill would instead limit the amount of credits received by a recurring television series to the sum of the base year allocation and the product of the base year allocation, the number of subsequent years, and 3%, as those terms are defined. The bill would additionally, for purposes of the motion picture credit 4.0, require a recurring television

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series to reapply for the credit if it does not request a credit allocation within 18 months from the date of completion of principal photography of the previous season, as specified.
(4) Existing law establishes a Career Pathways Program, under the California Film Commission, to fund technical skills training for individuals from underserved communities for entry into film and television jobs. Existing law requires the program to work with nonprofit organizations that have an established record of training and job placement in the entertainment industry, focus on training individuals from traditionally underserved communities, and offer training courses focused on skilled, technical positions, as specified. Existing law requires a qualified motion picture to pay a fee equal to 0.5% of their approved credit amount to the program, and authorizes the California Film Commission to increase the fee amount, as specified.

This bill would require the California Film Commission to expand the number of nonprofit organizations that partner with the Career Pathways program, and would require the California Film Commission to establish an application process for nonprofit organizations to obtain approval as a Career Pathways Program. The bill would require the application meet specified requirements to be approved and would provide criteria for the California Film Commission to consider when approving applications. The bill would require the California Film Commission, before July 1, 2026, to develop criteria to incentivize the placement of trainees from the Career Pathways Program in qualified productions, and for the motion picture credit 4.0, would authorize the California Film Commission to increase the credit amount up to 2% of qualified expenditures for qualified productions that employ trainees from a Career Pathways Program.

This
(5) This bill would include a change in state statute that would result in a taxpayer paying a higher tax within the meaning of Section 3 of Article XIII A of the California Constitution, and thus would require for passage the approval of 2Ú3 of the membership of each house of the Legislature.

V ote: 2Ú3. Appropriation: yes. Fiscal committee: yes.

State-mandated local program: no.

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The people of the State of California do enact as follows:
1 SECTION 1. Section 17053.98 of the Revenue and Taxation 2 Code is amended to read:
3 17053.98. (a) (1) For taxable years beginning on or after 4 January 1, 2020, there shall be allowed to a qualified taxpayer a 5 credit against the “net tax,” as defined in Section 17039, subject 6 to a computation and ranking by the California Film Commission 7 in subdivision (g) and the allocation amount categories described 8 in subdivision (i), in an amount equal to 20 percent or 25 percent, 9 whichever is the applicable credit percentage described in 10 paragraph (4), of the qualified expenditures for the production of 11 a qualified motion picture in California. A credit shall not be 12 allowed under this section for any qualified expenditures for the 13 production of a motion picture in California if a credit has been 14 claimed for those same expenditures under Section 17053.85 or 15 17053.95.
16 (2) Except as otherwise provided in this section, the credit shall 17 be allowed for the taxable year in which the California Film 18 Commission issues the credit certificate pursuant to subdivision 19 (g) for the qualified motion picture, but in no instance prior to July 20 1, 2020, and shall be for the applicable percentage of all qualified 21 expenditures paid or incurred by the qualified taxpayer in all 22 taxable years for that qualified motion picture.
23 (3) (A) The amount of the credit allowed to a qualified taxpayer 24 shall be limited to the amount specified in the credit certificate 25 issued to the qualified taxpayer by the California Film Commission 26 pursuant to subdivision (g).
27 (B) In determining the amount specified in the credit certificate 28 in subparagraph (A), the California Film Commission shall be 29 limited to the following amounts of qualified expenditures for each 30 qualified motion picture:
31 (i) (I) In the case of a feature, up to one hundred million dollars 32 ($100,000,000).
33 (II) Notwithstanding subclause (I), for taxable years beginning 34 on or after January 1, 2025, and only for purposes of the credit 35 allowed in subdivision (k), in the case of a feature, up to one 36 hundred twenty million dollars ($120,000,000).
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1 (ii) (I) In the case of a miniseries described in clause (ii) of 2 subparagraph (A) of paragraph (18) of subdivision (b), up to one 3 hundred million dollars ($100,000,000).
4 (II) Notwithstanding subclause (I), for taxable years beginning 5 on or after January 1, 2025, and only for purposes of the credit 6 allowed in subdivision (k), in the case of a miniseries described 7 in clause (ii) of subparagraph (A) of paragraph (18) of subdivision 8 (b), up to one hundred twenty million dollars ($120,000,000). 9 (iii) (I) In the case of a television series described in clause (iii) 10 or clause (v) of subparagraph (A) of paragraph (18) of subdivision 11 (b), up to one hundred million dollars ($100,000,000) per season. 12 (II) Notwithstanding subclause (I), for taxable years beginning 13 on or after January 1, 2025, and only for purposes of the credit 14 allowed in subdivision (k), in the case of a television series 15 described in clause (iii) or clause (v) of subparagraph (A) of 16 paragraph (18) of subdivision (b), up to one hundred twenty million 17 dollars ($120,000,000).
18 (iv) In the case of an independent film, up to ten million dollars 19 ($10,000,000).
20 (4) For purposes of paragraphs (1) and (2), the applicable credit 21 percentage shall be:
22 (A) Twenty percent of the qualified expenditures attributable 23 to the production of a qualified motion picture in California, 24 including, but not limited to, a feature or a television series that 25 relocated to California that is in its second or subsequent years of 26 receiving a tax credit allocation pursuant to this section, Section 27 17053.85, or Section 17053.95.
28 (B) Twenty-five percent of the qualified expenditures 29 attributable to the production of a qualified motion picture in 30 California where the qualified motion picture is a television series 31 that relocated to California in its first year of receiving a tax credit 32 allocation pursuant to this section.
33 (C) Twenty-five percent of the qualified expenditures 34 attributable to the production of a qualified motion picture that is 35 an independent film.
36 (D) Additional credits shall be allowed for the production of a 37 qualified motion picture whose applicable credit percentage is 38 determined pursuant to subparagraph (A), in an aggregate amount 39 not to exceed 5 percent of the qualified expenditures under that 40 subparagraph, as follows:

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1 (i) (I) Five percent of qualified expenditures, excluding qualified 2 wages described in subparagraph (E), relating to original 3 photography outside the Los Angeles zone.
4 (II) For purposes of this clause and subparagraph (E):
5 (ia) “Applicable period” means the period that commences with 6 preproduction and ends when original photography concludes. The 7 applicable period includes the time necessary to strike a remote 8 location and return to the Los Angeles zone.
9 (ib) “Los Angeles zone” means the area within a circle 30 miles 10 in radius from Beverly Boulevard and La Cienega Boulevard, Los 11 Angeles, California, and includes Agua Dulce, Castaic, including 12 Castaic Lake, Leo Carrillo State Beach, Ontario International 13 Airport, Piru, and Pomona, including the Los Angeles County 14 Fairgrounds. The Metro-Goldwyn-Mayer, Inc. Conejo Ranch 15 property is within the Los Angeles zone.
16 (ic) “Original photography” includes principal photography and 17 reshooting original footage.
18 (id) “Qualified expenditures relating to original photography 19 outside the Los Angeles zone” means amounts paid or incurred 20 during the applicable period for tangible personal property 21 purchased or leased and used or consumed outside the Los Angeles 22 zone and relating to original photography outside the Los Angeles 23 zone and qualified wages paid for services performed outside the 24 Los Angeles zone and relating to original photography outside the 25 Los Angeles zone.
26 (ii) Five percent of the qualified expenditures relating to 27 qualified visual effects attributable to the production of a qualified 28 motion picture in California.
29 (E) (i) Notwithstanding subparagraph (D), an amount equal to 30 10 percent of qualified wages paid for services performed relating 31 to original photography outside of the Los Angeles zone to 32 qualified individuals who reside in California but outside the Los 33 Angeles zone shall be allowed as an additional credit for the 34 production of a qualified motion picture whose applicable credit 35 percentage is determined pursuant to subparagraph (A). 36 (ii) Notwithstanding subparagraph (D), an amount equal to 5 37 percent of qualified wages paid for services performed relating to 38 original photography outside of the Los Angeles zone to qualified 39 individuals who reside in California but outside the Los Angeles 40 zone shall be allowed as an additional credit for the production of

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1 a qualified motion picture whose applicable credit percentage is 2 determined pursuant to subparagraph (B) or (C).
3 (b) For purposes of this section:
4 (1) “Ancillary product” means any article for sale to the public 5 that contains a portion of, or any element of, the qualified motion 6 picture.
7 (2) “Budget” means an estimate of all expenses paid or incurred 8 during the production period of a qualified motion picture. It shall 9 be the same budget used by the qualified taxpayer and production 10 company for all qualified motion picture purposes.
11 (3) “Clip use” means a use of any portion of a motion picture, 12 other than the qualified motion picture, used in the qualified motion 13 picture.
14 (4) “Credit certificate” means the certificate issued by the 15 California Film Commission pursuant to subparagraph (D) of 16 paragraph (3) of subdivision (g).
17 (5) (A) “Employee fringe benefits” means the amount allowable 18 as a deduction under this part to the qualified taxpayer involved 19 in the production of the qualified motion picture, exclusive of any 20 amounts contributed by employees, for any year during the 21 production period with respect to any of the following:
22 (i) Employer contributions under any pension, profit-sharing, 23 annuity, or similar plan.
24 (ii) Employer-provided coverage under any accident or health 25 plan for employees.
26 (iii) The employer’s cost of life or disability insurance provided 27 to employees.
28 (B) Any amount treated as wages under clause (i) of 29 subparagraph (A) of paragraph (21) shall not be taken into account 30 under this paragraph.
31 (6) (A) “Independent film” means a motion picture with a 32 minimum budget of one million dollars ($1,000,000) that is 33 produced by a company that is not publicly traded and publicly 34 traded companies do not own, directly or indirectly, more than 25 35 percent of the producing company.
36 (B) Notwithstanding subparagraph (A), for taxable years 37 beginning on or after January 1, 2025, and only for purposes of 38 the credit allowed in subdivision (k), a motion picture with a 39 minimum budget of one million dollars ($1,000,000) that is 40 produced by a company that is not publicly traded and publicly

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1 traded companies do not own, directly or indirectly, more than 30 2 percent of the producing company.
3 (7) “Jobs ratio” means the amount of qualified wages paid to 4 qualified individuals divided by the amount of tax credit, not 5 including any additional credit allowed pursuant to subparagraphs 6 (D) and (E) of paragraph (4) of subdivision (a), as computed by 7 the California Film Commission. For the purposes of the 8 calculation of the jobs ratio only, 70 percent of qualified 9 expenditures for visual effects paid to third-party vendors for work 10 performed in California shall be deemed to be qualified wages 11 paid to a qualified individual.
12 (8) “Licensing” means any grant of rights to distribute the 13 qualified motion picture, in whole or in part.
14 (9) “New use” means any use of a motion picture in a medium 15 other than the medium for which it was initially created. 16 (10) “Pilot for a new television series” means the initial episode 17 produced for a proposed television series.
18 (11) (A) “Postproduction” means the final activities in a 19 qualified motion picture’s production, including editing, foley 20 recording, automatic dialogue replacement, sound editing, scoring, 21 music track recording by musicians and music editing, beginning 22 and end credits, negative cutting, negative processing and 23 duplication, the addition of sound and visual effects, sound mixing, 24 film-to-tape transfers, encoding, and color correction. 25 (B) “Postproduction” does not include the manufacture or 26 shipping of release prints or their equivalent.
27 (12) “Preproduction” means the process of preparation for actual 28 physical production which begins after a qualified motion picture 29 has received a firm agreement of financial commitment, or is 30 greenlit, with, for example, the establishment of a dedicated 31 production office, the hiring of key crew members, and includes, 32 but is not limited to, activities that include location scouting and 33 execution of contracts with vendors of equipment and stage space. 34 (13) “Principal photography” means the phase of production 35 during which the motion picture is actually shot, as distinguished 36 from preproduction and postproduction.
37 (14) “Production period” means the period beginning with 38 preproduction and ending upon completion of postproduction. 39 (15) “Qualified entity” means a personal service corporation as 40 defined in Section 269A(b)(1) of the Internal Revenue Code, a

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1 payroll services corporation, or any entity receiving qualified wages 2 with respect to services performed by a qualified individual. 3 (16) “Qualified expenditures” means amounts paid or incurred 4 for tangible personal property purchased or leased, and used, within 5 this state in the production of a qualified motion picture and 6 payments, including qualified wages, for services performed within 7 this state in the production of a qualified motion picture. 8 (17) (A) “Qualified individual” means any individual who 9 performs services during the production period in an activity related 10 to the production of a qualified motion picture.
11 (B) “Qualified individual” shall not include either of the 12 following:
13 (i) Any individual related to the qualified taxpayer as described 14 in subparagraph (A), (B), or (C) of Section 51(i)(1) of the Internal 15 Revenue Code.
16 (ii) Any 5-percent owner, as defined in Section 416(i)(1)(B) of 17 the Internal Revenue Code, of the qualified taxpayer. 18 (18) (A) “Qualified motion picture” means a motion picture 19 that is produced for distribution to the general public, regardless 20 of medium, that is one of the following:
21 (i) A feature with a minimum production budget of one million 22 dollars ($1,000,000).
23 (ii) A miniseries consisting of two or more episodes, each longer 24 than 40 minutes of running time, exclusive of commercials, that 25 is produced in California, with a minimum production budget of 26 one million dollars ($1,000,000) per episode.
27 (iii) A new television series of episodes longer than 40 minutes 28 each of running time, exclusive of commercials, that is produced 29 in California, with a minimum production budget of one million 30 dollars ($1,000,000) per episode.
31 (iv) An independent film.
32 (v) A television series that relocated to California. 33 (vi) For taxable years beginning before January 1, 2025, a (I) A 34 pilot for a new television series that is longer than 40 minutes of 35 running time, exclusive of commercials, that is produced in 36 California, and with a minimum production budget of one million 37 dollars ($1,000,000). For purposes of the credit allowed in 38 subdivision (k), this subclause shall only apply for taxable years 39 beginning before January 1, 2025.
40 (vii)

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1 (II) For taxable years beginning on or after January 1, 2025, 2 and only for purposes of the credit allowed in subdivision (k), a 3 pilot for a new live action or animated series that is at least 20 4 minutes of running time, exclusive of commercials, and is produced 5 in California with a minimum production budget of one million 6 dollars ($1,000,000) per episode.
7 (viii)
8 (vii) For taxable years beginning on or after January 1, 2025, 9 and only for purposes of the credit allowed in subdivision (k), a 10 live action or animated series, averaging across a season at least 11 20 minutes of running time per episode, exclusive of commercials, 12 that is produced in California, with a minimum production budget 13 of one million dollars ($1,000,000) per episode.
14 (ix)
15 (viii) For taxable years beginning on or after January 1, 2025, 16 and only for purposes of the credit allowed in subdivision (k), an 17 animated film that is produced in California, with a minimum 18 production budget of one million dollars ($1,000,000). 19 (x)
20 (ix) For taxable years beginning on or after January 1, 2025, 21 and only for purposes of the credit allowed in subdivision (k), a 22 large-scale competition show, not including traditional reality, 23 game shows, talk shows, or docufollow television programming, 24 that is produced in California, with a minimum production budget 25 of one million dollars ($1,000,000) per episode.
26 (B) To qualify as a “qualified motion picture,” all of the 27 following conditions shall be satisfied:
28 (i) At least 75 percent of the principal photography days occur 29 wholly in California or 75 percent of the production budget is 30 incurred for payment for services performed within the state and 31 the purchase or rental of property used within the state. 32 (ii) Production of the qualified motion picture is completed 33 within 30 months from the date on which the qualified taxpayer’s 34 application is approved by the California Film Commission. For 35 purposes of this section, a qualified motion picture is “completed” 36 when the process of postproduction has been finished. 37 (iii) The copyright for the motion picture is registered with the 38 United States Copyright Office pursuant to Title 17 of the United 39 States Code.

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1 (iv) Principal photography of the qualified motion picture 2 commences after the date on which the application is approved by 3 the California Film Commission, but no later than 180 days after 4 the date of that approval if the qualified motion picture has a budget 5 with qualified expenditures of less than one hundred million dollars 6 ($100,000,000), and no later than 240 days after the date of that 7 approval in the case of a qualified motion picture with a budget 8 of qualified expenditures with at least one hundred million dollars 9 ($100,000,000), unless death, disability, or disfigurement of the 10 director or of a principal cast member; an act of God, including, 11 but not limited to, fire, flood, earthquake, storm, hurricane, or other 12 natural disaster; terrorist activities; or government sanction has 13 directly prevented a production’s ability to begin principal 14 photography within the prescribed 180- or 240-day commencement 15 period.
16 (C) For the purposes of subparagraph (A), in computing the 17 total wages paid or incurred for the production of a qualified 18 motion picture, all amounts paid or incurred by all persons or 19 entities that share in the costs of the qualified motion picture shall 20 be aggregated.
21 (D) “Qualified motion picture” shall not include commercial 22 advertising, music videos, a motion picture produced for private 23 noncommercial use, such as weddings, graduations, or as part of 24 an educational course and made by students, a news program, 25 current events or public events program, talk show, game show, 26 sporting event or activity, awards show, telethon or other 27 production that solicits funds, reality television program, except 28 as specified in clause (ix) of subparagraph (A), clip-based 29 programming if more than 50 percent of the content is comprised 30 of licensed footage, documentaries, variety programs, daytime 31 dramas, strip shows, one-half hour (air time) episodic television 32 shows, except as specified in clause (vii) of subparagraph (A), or 33 any production that falls within the recordkeeping requirements 34 of Section 2257 of Title 18 of the United States Code. 35 (19) (A) “Qualified taxpayer” means a taxpayer who has paid 36 or incurred qualified expenditures, participated in the Career 37 Readiness requirement in Section 17053.95, and has been issued 38 a credit certificate by the California Film Commission pursuant 39 to subdivision (g).

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1 (B) In the case of any pass-thru entity, the determination of 2 whether a taxpayer is a qualified taxpayer under this section shall 3 be made at the entity level and any credit under this section is not 4 allowed to the pass-thru entity but shall be passed through to the 5 partners or shareholders in accordance with applicable provisions 6 of Part 10 (commencing with Section 17001) or Part 11 7 (commencing with Section 23001). For purposes of this paragraph, 8 “pass-thru entity” means any entity taxed as a partnership or “S” 9 corporation.
10 (20) “Qualified visual effects” means visual effects where at 11 least 75 percent or a minimum of ten million dollars ($10,000,000) 12 of the qualified expenditures for the visual effects are paid or 13 incurred in California.
14 (21) (A) “Qualified wages” means all of the following:
15 (i) Any wages subject to withholding under Division 6 16 (commencing with Section 13000) of the Unemployment Insurance 17 Code that were paid or incurred by any taxpayer involved in the 18 production of a qualified motion picture with respect to a qualified 19 individual for services performed on the qualified motion picture 20 production within this state.
21 (ii) The portion of any employee fringe benefits paid or incurred 22 by any taxpayer involved in the production of the qualified motion 23 picture that are properly allocable to qualified wage amounts 24 described in clauses (i), (iii), and (iv).
25 (iii) Any payments made to a qualified entity for services 26 performed in this state by qualified individuals within the meaning 27 of paragraph (17).
28 (iv) Remuneration paid to an independent contractor who is a 29 qualified individual for services performed within this state by that 30 qualified individual.
31 (B) “Qualified wages” shall not include any of the following:
32 (i) Expenses, including wages, related to new use, reuse, clip 33 use, licensing, secondary markets, or residual compensation, or 34 the creation of any ancillary product, including, but not limited to, 35 a soundtrack album, toy, game, trailer, or teaser.
36 (ii) Expenses, including wages, paid or incurred with respect to 37 acquisition, development, turnaround, or any rights thereto. 38 (iii) Expenses, including wages, related to financing, overhead, 39 marketing, promotion, or distribution of a qualified motion picture.

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1 (iv) Expenses, including wages, paid per person per qualified 2 motion picture for writers, directors, music directors, music 3 composers, music supervisors, producers, and performers, other 4 than background actors with no scripted lines.
5 (22) “Recurring television series” means any television series 6 that was previously approved and issued a credit allocation letter 7 under this section.
8 (23) “Residual compensation” means supplemental
9 compensation paid at the time that a motion picture is exhibited 10 through new use, reuse, clip use, or in secondary markets, as 11 distinguished from payments made during production.
12 (24) “Reuse” means any use of a qualified motion picture in the 13 same medium for which it was created, following the initial use 14 in that medium.
15 (25) “Secondary markets” means media in which a qualified 16 motion picture is exhibited following the initial media in which it 17 is exhibited.
18 (26) “Television series that relocated to California” means a 19 television series, without regard to episode length or initial media 20 exhibition, with a minimum production budget of one million 21 dollars ($1,000,000) per episode, that filmed at least 75 percent of 22 principal photography days in its most recent season outside of 23 California or has filmed all seasons outside of California and for 24 which the taxpayer certifies that the credit provided pursuant to 25 this section is the primary reason for relocating to California. 26 (27) “Visual effects” means the creation, alteration, or 27 enhancement of images that cannot be captured on a set or location 28 during live action photography and therefore is accomplished in 29 postproduction. It includes, but is not limited to, matte paintings, 30 animation, set extensions, computer-generated objects, characters 31 and environments, compositing (combining two or more elements 32 in a final image), and wire removals. “Visual effects” does not 33 include fully animated projects, whether created by traditional or 34 digital means.
35 (c) (1) Notwithstanding any other law, a qualified taxpayer 36 may sell any credit allowed under this section that is attributable 37 to an independent film, as defined in paragraph (6) of subdivision 38 (b), to an unrelated party.
39 (2) The qualified taxpayer shall report to the Franchise Tax 40 Board prior to the sale of the credit, in the form and manner

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1 specified by the Franchise Tax Board, all required information 2 regarding the purchase and sale of the credit, including the social 3 security or other taxpayer identification number of the unrelated 4 party to whom the credit has been sold, the face amount of the 5 credit sold, and the amount of consideration received by the 6 qualified taxpayer for the sale of the credit.
7 (3) In the case where the credit allowed under this section 8 exceeds the “net tax,” the excess credit may be carried over to 9 reduce the “net tax” in the following taxable year, and succeeding 10 eight taxable years, if necessary, until the credit has been exhausted. 11 (4) A credit shall not be sold pursuant to this subdivision to 12 more than one taxpayer, nor may the credit be resold by the 13 unrelated party to another taxpayer or other party.
14 (5) A party that has acquired tax credits under this subdivision 15 shall be subject to the requirements of this section. 16 (6) In no event may a qualified taxpayer assign or sell any tax 17 credit to the extent the tax credit allowed by this section is claimed 18 on any tax return of the qualified taxpayer.
19 (7) In the event that both the taxpayer originally allocated a 20 credit under this section by the California Film Commission and 21 a taxpayer to whom the credit has been sold both claim the same 22 amount of credit on their tax returns, the Franchise Tax Board may 23 disallow the credit of either taxpayer, so long as the statute of 24 limitations upon assessment remains open.
25 (8) Chapter 3.5 (commencing with Section 11340) of Part 1 of 26 Division 3 of Title 2 of the Government Code does not apply to 27 any standard, criterion, procedure, determination, rule, notice, or 28 guideline established or issued by the Franchise Tax Board 29 pursuant to this subdivision.
30 (9) Subdivision (g) of Section 17039 shall not apply to any 31 credit sold pursuant to this subdivision.
32 (10) For purposes of this subdivision, the unrelated party or 33 parties that purchase a credit pursuant to this subdivision shall be 34 treated as a qualified taxpayer pursuant to paragraph (1) of 35 subdivision (a).
36 (d) (1) No credit shall be allowed pursuant to this section unless 37 the qualified taxpayer provides the following to the California 38 Film Commission:
39 (A) Identification of each qualified individual.
40 (B) The specific start and end dates of production.

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1 (C) The total wages paid.
2 (D) The total amount of qualified wages paid to qualified 3 individuals.
4 (E) Aggregate data for individuals whose wages are excluded 5 from qualified wages by clause (iv) of subparagraph (B) of 6 paragraph (21) of subdivision (b), including their gender, ethnic, 7 and racial makeup.
8 (F) The copyright registration number, as reflected on the 9 certificate of registration issued under the authority of Section 410 10 of Title 17 of the United States Code, relating to registration of 11 claim and issuance of certificate. The registration number shall be 12 provided on the return claiming the credit.
13 (G) The total amounts paid or incurred to purchase or lease 14 tangible personal property used in the production of a qualified 15 motion picture.
16 (H) Information to substantiate its qualified expenditures. 17 (I) Information required by the California Film Commission 18 under regulations promulgated pursuant to subdivision (g) 19 necessary to verify the amount of credit claimed.
20 (J) Data regarding the diversity of the workforce employed by 21 the applicant on the qualified motion picture, as described in 22 subdivision (g).
23 (K) Documentation verifying completion of the Career 24 Readiness requirement.
25 (L) Documentation verifying that the qualified taxpayer paid a 26 fee as described in subdivision (e).
27 (2) (A) Based on the information provided in paragraph (1), 28 the California Film Commission shall recompute the jobs ratio 29 previously computed in subdivision (g) and compare this 30 recomputed jobs ratio to the jobs ratio that the qualified taxpayer 31 previously listed on the application submitted pursuant to 32 subdivision (g).
33 (B) (i) If the California Film Commission determines that the 34 jobs ratio has been reduced by more than 10 percent for a qualified 35 motion picture, the California Film Commission shall reduce the 36 amount of credit allowed by an equal percentage, unless the 37 qualified taxpayer demonstrates, and the California Film 38 Commission determines, that reasonable cause exists for the jobs 39 ratio reduction.

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1 (ii) If the California Film Commission determines that the jobs 2 ratio has been reduced by more than 20 percent for a qualified 3 motion picture, the California Film Commission shall not accept 4 an application described in subdivision (g) from that qualified 5 taxpayer or any member of the qualified taxpayer’s controlled 6 group for a period of not less than one year from the date of that 7 determination, unless the qualified taxpayer demonstrates, and the 8 California Film Commission determines, that reasonable cause 9 exists for the jobs ratio reduction.
10 (C) For the purposes of this paragraph, “reasonable cause” 11 means unforeseen circumstances beyond the control of the qualified 12 taxpayer, such as, but not limited to, the cancellation of a television 13 series prior to the completion of the scheduled number of episodes 14 or other similar circumstances as determined by the California 15 Film Commission in regulations to be adopted pursuant to 16 subdivision (e).
17 (e) (1) (A) Subject to the Administrative Procedure Act 18 (Chapter 3.5 (commencing with Section 11340) of Part 1 of 19 Division 3 of Title 2 of the Government Code), the California Film 20 Commission shall adopt rules and regulations to implement a pilot 21 Career Pathways Training program including a fee to be paid by 22 the qualified taxpayer, if the qualified taxpayer receives a credit 23 under this section, to fund technical skills training to individuals 24 from underserved communities for entry into film and television 25 industry jobs. The California Film Commission shall (i) identify 26 a not-for-profit fiscal agent with direct relationships to industry 27 skills training programs to manage the funds; and (ii) engage 28 labor-management jointly administered training programs with 29 skills training focused on the entertainment industry to implement 30 the program with California Film Commission approval and 31 oversight. With regard to the Career Readiness requirement in 32 Section 17053.95, the California Film Commission shall identify 33 training and public service opportunities that may include, but not 34 be limited to, hiring interns, public service announcements, and 35 community outreach shall continue. The California Film 36 Commission may prescribe rules and regulations to carry out the 37 purposes of this section, including, subparagraph (D) of paragraph 38 (4) of subdivision (a) and clause (iv) of subparagraph (D) of 39 paragraph (2) of subdivision (g), and including any rules and 40 regulations necessary to establish procedures, processes,

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1 requirements, application fee structure, and rules identified in or 2 required to implement this section, including credit and logo 3 requirements and credit allocation procedures over multiple fiscal 4 years where the qualified taxpayer is producing a series of features 5 that will be filmed concurrently.
6 (B) Notwithstanding any other law, prior to preparing a notice 7 of proposed action pursuant to Section 11346.4 of the Government 8 Code and prior to making any revision to the proposed regulation 9 other than a change that is nonsubstantial or solely grammatical 10 in nature, the Governor’s Office of Business and Economic 11 Development shall first approve the proposed regulation or 12 proposed change to a proposed regulation regarding allocating the 13 credit pursuant to subdivision (i), computing the jobs ratio as 14 described in subdivisions (d) and (g), and defining “reasonable 15 cause” pursuant to subparagraph (C) of paragraph (2) of subdivision 16 (d).
17 (2) (A) Implementation of this section for the 2020–21 fiscal 18 year is deemed an emergency and necessary for the immediate 19 preservation of the public peace, health, and safety, or general 20 welfare and, therefore, the California Film Commission is hereby 21 authorized to adopt emergency regulations to implement this 22 section during the 2020–21 fiscal year in accordance with the 23 rulemaking provisions of the Administrative Procedure Act 24 (Chapter 3.5 (commencing with Section 11340) of Part 1 of 25 Division 3 of Title 2 of the Government Code).
26 (B) Nothing in this paragraph shall be construed to require the 27 Governor’s Office of Business and Economic Development to 28 approve emergency regulations adopted pursuant to this paragraph. 29 (3) The California Film Commission shall not be required to 30 prepare an economic impact analysis pursuant to the Administrative 31 Procedure Act (Chapter 3.5 (commencing with Section 11340) of 32 Part 1 of Division 3 of Title 2 of the Government Code) with regard 33 to any rules and regulations adopted pursuant to this subdivision. 34 (f) If the qualified taxpayer fails to provide the copyright 35 registration number as required in subparagraph (E) of paragraph 36 (1) of subdivision (d), the credit shall be disallowed and assessed 37 and collected under Section 19051 until the procedures are 38 satisfied.
39 (g) For purposes of this section, the California Film Commission 40 shall do the following:

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1 (1) Subject to the requirements of subparagraphs (A) to (E), 2 inclusive, of paragraph (2), on or after July 1, 2020, and before 3 July 1, 2025, in two or more allocation periods per fiscal year, 4 allocate tax credits to applicants.
5 (2) (A) Establish a procedure for applicants to file with the 6 California Film Commission a written application, on a form jointly 7 prescribed by the California Film Commission and the Franchise 8 Tax Board for the allocation of the tax credit. The application shall 9 include, but not be limited to, the following information:
10 (i) The budget for the motion picture production.
11 (ii) The number of production days.
12 (iii) A financing plan for the production.
13 (iv) The diversity of the workforce employed by the applicant, 14 including, but not limited to, the ethnic and racial makeup of the 15 individuals employed by the applicant during the production of 16 the qualified motion picture, to the extent possible. 17 (v) All members of a combined reporting group, if known at 18 the time of the application.
19 (vi) The amount of qualified wages the applicant expects to pay 20 to qualified individuals.
21 (vii) The amount of tax credit the applicant computes the 22 qualified motion picture will receive, applying the applicable credit 23 percentages described in paragraph (4) of subdivision (a). 24 (viii) A statement establishing that the tax credit described in 25 this section is a significant factor in the applicant’s choice of 26 location for the qualified motion picture. The statement shall 27 include information about whether the qualified motion picture is 28 at risk of not being filmed or specify the jurisdiction or jurisdictions 29 in which the qualified motion picture will be located in the absence 30 of the tax credit. The statement shall be signed by an officer or 31 executive of the applicant.
32 (ix) The applicant’s written policy against unlawful harassment, 33 including, but not limited to, sexual harassment, which includes 34 procedures for reporting and investigating harassment claims, a 35 phone number for an individual who will be responsible for 36 receiving harassment claims, and a statement that the company 37 will not retaliate against an individual who reports harassment. 38 The applicant shall also indicate how the policy will be distributed 39 to employees and include a summary of education training

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1 resources, including the prohibition against, and prevention and 2 correction of, sexual harassment and remedies available. 3 (x) The ethnic and racial makeup and gender of individuals 4 whose wages are excluded from qualified wages as set forth in 5 clause (iv) of subparagraph (B) of paragraph (21) of subdivision 6 (b).
7 (xi) A summary of the applicant’s voluntary programs to 8 increase the representation of minorities and women in the job 9 classifications that are not included in qualified wages as set forth 10 in clause (iv) of subparagraph (B) of paragraph (21) of subdivision 11 (b) and information about how these programs are publicized to 12 interested parties. The officer or executive referenced in clause 13 (x) who is signing the statement shall provide additional 14 information about these programs, if needed and upon request, to 15 the California Film Commission.
16 (xii) Any other information deemed relevant by the California 17 Film Commission or the Franchise Tax Board.
18 (B) Establish criteria, consistent with the requirements of this 19 section, for allocating tax credits.
20 (C) Determine and designate applicants who meet the 21 requirements of this section.
22 (D) (i) For purposes of allocating the credit amounts subject to 23 the categories described in subdivision (i) in any fiscal year, the 24 California Film Commission shall do all of the following:
25 (ii) For each allocation date and for each category, list each 26 applicant from highest to lowest according to the jobs ratio as 27 computed by the California Film Commission.
28 (iii) Subject to the applicable credit percentage, allocate the 29 credit to each applicant according to the highest jobs ratio, working 30 down the list, until the credit amount is exhausted. 31 (iv) (I) Pursuant to regulations adopted pursuant to subdivision 32 (e), the California Film Commission may increase the jobs ratio 33 by up to 25 percent if a qualified motion picture increases economic 34 activity in California according to criteria developed by the 35 California Film Commission that would include, but not be limited 36 to, such factors as, the amount of the production and postproduction 37 spending in California, the utilization of scoring musicians in 38 California, and other criteria measuring economic impact in 39 California as determined by the California Film Commission.

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1 (II) For qualified motion pictures that are described in 2 subparagraph (D) of paragraph (8) of subdivision (k), the jobs ratio 3 shall be equal to the product of the jobs ratio calculated in 4 paragraph (7) of subdivision (b) and 133 percent.
5 (v) Notwithstanding any other law, any television series, 6 relocating television series, or any new television series based on 7 a pilot for a new television series that has been approved and issued 8 a credit allocation by the California Film Commission under this 9 section, including subdivision (k), Section 23698, including 10 subdivision (k), or Section 17053.95, 23695, 17053.85, or 23685 11 shall be issued a credit for each subsequent season, for the life of 12 that television series whenever credits are allocated within a fiscal 13 year. For taxable years beginning before January 1, 2025, the 14 California Film Commission shall limit the amount of credits any 15 recurring television series receives in a subsequent season to no 16 more than the amount reserved in its prior fiscal year Credit 17 Allocation Letter or Letters, or if no amounts were reserved in the 18 prior fiscal year, the most immediate prior fiscal year in which a 19 Credit Allocation Letter or Letters were received. For taxable years 20 beginning on or after January 1, 2025, the California Film 21 Commission shall limit the amount of credits any recurring 22 television series receives in a subsequent season to no more than 23 the recurring television allocation amount, as defined in paragraph 24 (23) of subdivision (b) of Section 17053.98.1. In the event that 25 insufficient tax credits are available to fund all recurring television 26 series pursuant to this clause for any fiscal year or in the event the 27 California Film Commission projects, in collaboration with the 28 Department of Finance, that there will be insufficient tax credits 29 available to fund all recurring television series in either of the 30 subsequent two fiscal years, the California Film Commission shall 31 make the following adjustments in the order given until the 32 shortfall, or any projected shortfall for the two subsequent fiscal 33 years, for recurring television series is eliminated:
34 (I) Notwithstanding clause (iii) of subparagraph (A) of paragraph 35 (2) of subdivision (i), the California Film Commission may redirect 36 up to 100 percent of the credit amounts allocated to the relocating 37 television series category to recurring television series for that 38 fiscal year until the shortfall or projected shortfall is eliminated. 39 (II) Notwithstanding clause (iv) of subparagraph (A) of 40 paragraph (2) of subdivision (i), the California Film Commission

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1 may redirect up to 100 percent of the credit amounts allocated to 2 a new television series to recurring television series for that fiscal 3 year until the shortfall or projected shortfall is eliminated. 4 (III) Notwithstanding clause (ii) of subparagraph (A) of 5 paragraph (2) of subdivision (i), the California Film Commission 6 may redirect up to 100 percent of the credit allocations from the 7 features category to the recurring television series category for 8 that fiscal year until the shortfall is eliminated.
9 (IV) Allocate up to 25 percent of total credit allocations that 10 would otherwise be allocated in the 2024–25 fiscal year to recurring 11 television series in the current fiscal year until the shortfall is 12 eliminated. Any amounts transferred for allocation in the current 13 fiscal year shall be subtracted from the amount allowed to be 14 allocated in the 2024–25 fiscal year as specified in subdivision (i). 15 Notwithstanding paragraph (3), the credit allocations that are 16 subtracted from 2024–25 shall not be certified until July 1, 2025, 17 or later.
18 (V) The California Film Commission shall consult with the 19 qualified taxpayers who are producing the recurring television 20 series for purposes of negotiating a minimally impactful reduction 21 in the amount of credits awarded to each recurring television series 22 for that fiscal year until the shortfall is eliminated. 23 (E) Subject to the annual cap and the allocation credit amounts 24 based on categories described in subdivision (i), allocate an 25 aggregate amount of credits under this section and Section 23698, 26 and allocate any carryover of unallocated or unused credits from 27 prior years and Sections 17053.85, 17053.95, 23685, and 23695, 28 and the amount of any credits reduced pursuant to paragraph (2) 29 of subdivision (d).
30 (3) Certify tax credits allocated to qualified taxpayers. 31 (A) Establish a verification procedure to update the information 32 in subparagraph (A) of paragraph (2) of subdivision (g), including, 33 but not limited to, all of the following:
34 (i) The amounts of qualified expenditures paid or incurred by 35 the applicant.
36 (ii) The diversity of the workforce employed by the applicant. 37 (iii) The ethnic and racial makeup and gender of individuals 38 whose wages are excluded from qualified wages by clause (iv) of 39 subparagraph (B) of paragraph (21) of subdivision (b).

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1 (B) Establish audit requirements that shall be satisfied before a 2 credit certificate may be issued by the California Film Commission. 3 (C) (i) Establish a procedure for a qualified taxpayer to report 4 to the California Film Commission, prior to the issuance of a credit 5 certificate, the following information:
6 (I) If readily available, a list of the states, provinces, or other 7 jurisdictions in which any member of the applicant’s combined 8 reporting group in the same business unit as the qualified taxpayer 9 that, in the preceding calendar year, has produced a qualified 10 motion picture intended for release in the United States market. 11 For purposes of this clause, “qualified motion picture” shall not 12 include any episodes of a television series that were complete or 13 in production prior to July 1, 2020.
14 (II) Whether a qualified motion picture described in subclause 15 (I) was awarded any financial incentive by the state, province, or 16 other jurisdiction that was predicated on the performance of 17 primary principal photography or postproduction in that location. 18 (ii) The California Film Commission may provide that the report 19 required by this subparagraph be filed in a single report provided 20 on a calendar year basis for those qualified taxpayers that receive 21 multiple credit certificates in a calendar year.
22 (D) Issue a credit certificate to a qualified taxpayer upon 23 completion of the qualified motion picture reflecting the credit 24 amount allocated after qualified expenditures have been verified 25 and the jobs ratio computed under this section. The amount of 26 credit shown on the credit certificate shall not exceed the amount 27 of credit allocated to that qualified taxpayer pursuant to this section. 28 (4) Obtain, when possible, the following information from 29 applicants that do not receive an allocation of credit:
30 (A) Whether the qualified motion picture that was the subject 31 of the application was completed.
32 (B) If completed, in which state or foreign jurisdiction was the 33 primary principal photography completed.
34 (C) Whether the applicant received any financial incentives 35 from the state or foreign jurisdiction to make the qualified motion 36 picture in that location.
37 (5) Provide the Legislative Analyst’s Office, upon request, any 38 or all application materials or any other materials received from, 39 or submitted by, applicants for which a credit allocation decision 40 has been made, including, but not limited to, applicants that did

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1 not receive a credit allocation. Materials provided to the Legislative 2 Analyst’s Office shall be in electronic format when available and 3 include, but not be limited to, information provided pursuant to 4 clauses (i) to (xii), inclusive, of subparagraph (A) of paragraph (2) 5 and the diversity workplans provided pursuant to clause (iv) of 6 subparagraph (B) of paragraph (2) of subdivision (k). 7 (6) The information provided to the California Film Commission 8 pursuant to this section shall constitute confidential tax information 9 for purposes of Article 2 (commencing with Section 19542) of 10 Chapter 7 of Part 10.2.
11 (7) (A) Notwithstanding any other law, on or after July 1, 2025, 12 the California Film Commission may allocate, pursuant to this 13 section, any previously allocated credits not certified that have not 14 previously been added to credit amounts available for allocation 15 under this section or a successor section or sections. 16 (B) For purposes of this section, “previously allocated credits 17 not certified” means either:
18 (i) Credits allocated under paragraph (1) for which the qualified 19 taxpayer to which the credit amounts were originally allocated has 20 notified the California Film Commission in writing that the 21 qualified taxpayer will not request certification for the allocated 22 credits.
23 (ii) The difference between the amount of credits allocated under 24 paragraph (1) to a qualified taxpayer and the amount of credits the 25 California Film Commission certified, for that qualified taxpayer. 26 For purposes of calculating the difference, the California Film 27 Commission shall not consider any credit amounts for which the 28 qualified taxpayer notifies the California Film Commission under 29 clause (i).
30 (8) Notwithstanding any other law, on or after July 1, 2025, the 31 California Film Commission may allocate, pursuant to this section, 32 any credit amounts described in subparagraphs (B) and (E) of 33 paragraph (1) of subdivision (i) that have not previously been 34 added to credit amounts available for allocation under this section 35 or a successor section or sections.
36 (9) The California Film Commission shall submit a report to 37 the Legislature, on an annual basis beginning January 1, 2022, on 38 aggregate diversity information for the productions allocated tax 39 credits allowed in this section and the diversity of the motion 40 picture production industry in California more generally.

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1 (h) (1) The California Film Commission shall annually provide 2 the Legislative Analyst’s Office, the Franchise Tax Board, and the 3 California Department of Tax and Fee Administration with a list 4 of qualified taxpayers and the tax credit amounts allocated to each 5 qualified taxpayer by the California Film Commission. The list 6 shall include the names and taxpayer identification numbers, 7 including taxpayer identification numbers of each partner or 8 shareholder, as applicable, of the qualified taxpayer. 9 (2) (A) Notwithstanding paragraph (6) of subdivision (g), the 10 California Film Commission shall annually post on its internet 11 website and make available for public release the following:
12 (i) A table which includes all of the following information: a 13 list of qualified taxpayers and the tax credit amounts allocated to 14 each qualified taxpayer by the California Film Commission, the 15 number of production days in California the qualified taxpayer 16 represented in its application would occur, the number of California 17 jobs that the qualified taxpayer represented in its application would 18 be directly created by the production, and the total amount of 19 qualified expenditures expected to be spent by the production. 20 (ii) A narrative staff summary describing the production of the 21 qualified taxpayer as well as background information regarding 22 the qualified taxpayer contained in the qualified taxpayer’s 23 application for the credit.
24 (iii) For qualified taxpayers allocated a credit, the aggregate 25 diversity information collected pursuant to clauses (iv) and (xii) 26 of subparagraph (A) of paragraph (2) of subdivision (g) organized 27 per production and an aggregate compilation describing the 28 voluntary programs collected pursuant to clause (xiii) of 29 subparagraph (A) of paragraph (2) of subdivision (g). 30 (B) Nothing in this subdivision shall be construed to make the 31 information submitted by an applicant for a tax credit under this 32 section a public record, including for the purposes of the California 33 Public Records Act (Division 10 (commencing with Section 34 7920.000) of Title 1 of the Government Code).
35 (3) The California Film Commission shall provide each city 36 and county in California with an instructional guide that includes, 37 but is not limited to, a review of best practices for facilitating 38 motion picture production in local jurisdictions, resources on 39 hosting and encouraging motion picture production, and the 40 California Film Commission’s Model Filming Ordinance. The

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1 California Film Commission shall maintain on its internet website 2 a list of initiatives by locality that encourage motion picture 3 production in regions across the state. The list shall be distributed 4 to each approved applicant for the program to highlight local 5 jurisdictions that offer incentives to facilitate film production. 6 (i) (1) (A) The aggregate amount of credits that may be 7 allocated for a fiscal year pursuant to this section and Section 8 23698, except as provided in subdivision (k) of this section and 9 subdivision (k) of Section 23698, is three hundred thirty million 10 dollars ($330,000,000), plus any amount described in subparagraph 11 (B), (C), (D), or (E) in credits for the 2020–21 fiscal year and each 12 fiscal year thereafter, through and including the 2024–25 fiscal 13 year, except as provided in paragraph (7) of subdivision (g), plus 14 the amount described in subparagraph (F) in credits for the 2021–22 15 and 2022–23 fiscal years.
16 (B) (i) Subject to clauses (ii) and (iii), the unused allocation 17 credit amount, if any, for the preceding fiscal year. 18 (ii) The amount of unused credit allocation attributable to 19 independent films shall only be allocated according to clause (i) 20 of subparagraph (A) of paragraph (2).
21 (iii) The total amount of any unused credit allocation amount 22 that is remaining shall only be allocated pursuant to clause (iv) of 23 subparagraph (A) of paragraph (2).
24 (C) The amount of previously allocated credits not certified. 25 (D) The amount of any credits reduced pursuant to paragraph 26 (2) of subdivision (d).
27 (E) That portion of any unused allocation credit amount, if any, 28 attributable to Section 17053.85, 17053.95, 23685, or 23695 29 available for that fiscal year in a manner as determined by 30 regulations promulgated by the California Film Commission. 31 (F) (i) For fiscal years 2021–22 and 2022–23, the California 32 Film Commission shall allocate an additional fifteen million dollars 33 ($15,000,000) in credits to be granted exclusively to television 34 series that relocate to California.
35 (I) Notwithstanding subparagraph (A) of paragraph (2) of this 36 subdivision and clause (v) of subparagraph (D) of paragraph (2) 37 of subdivision (g), the moneys allocated pursuant to this 38 subparagraph shall not be redirected or reallocated. 39 (II) Notwithstanding paragraph (25) of subdivision (b), for 40 purposes of this subparagraph, a “television series that relocated

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1 to California” means a television series, without regard to episode 2 length or initial media exhibition, with a minimum production 3 budget of one million dollars ($1,000,000) per episode that both 4 filmed at least 75 percent of principal photography days for at least 5 one episode outside of California and has not filmed more than 25 6 percent of principal photography days for any episode inside of 7 California.
8 (ii) For fiscal years 2021–22 and 2022–23, the California Film 9 Commission shall allocate an additional seventy-five million 10 dollars ($75,000,000) in credits to be granted exclusively to 11 recurring television series.
12 (2) (A) Notwithstanding the foregoing, and subject to paragraph 13 (4) of this subdivision and changes in allocations pursuant to clause 14 (v) of subparagraph (D) of paragraph (2) of subdivision (g), the 15 California Film Commission shall allocate the credit amounts 16 subject to the following categories:
17 (i) Independent films with qualified expenditures of ten million 18 dollars ($10,000,000) or less shall be allocated 4.8 percent of the 19 amount specified in paragraph (1). Independent films with qualified 20 expenditures in excess of ten million dollars ($10,000,000) shall 21 be allocated 3.2 percent of the amount specified in paragraph (1). 22 These amounts shall be in addition to any unused allocation credit 23 amount, if any, for the preceding fiscal year as described in 24 subparagraph (B) of paragraph (1).
25 (ii) Features shall be allocated 35 percent of the amount specified 26 in paragraph (1).
27 (iii) A relocating television series shall be allocated 17 percent 28 of the amount specified in paragraph (1).
29 (iv) A new television series, pilots for a new television series, 30 miniseries, and recurring television series shall be allocated 40 31 percent of the amount specified in paragraph (1), plus any unused 32 allocation credit amount, if any, for the preceding fiscal year as 33 described in subparagraph (B) of paragraph (1).
34 (B) Within any allocation period for credits to a relocating 35 television series, any unused amount shall be reallocated to the 36 category described in clause (iv) of subparagraph (A) and, if any 37 unused amount remains, reallocated in the next allocation period 38 for credits to a relocating television series.
39 (C) With respect to a relocating television series issued a credit 40 in a subsequent year pursuant to clause (v) of subparagraph (D)

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1 of paragraph (2) of subdivision (g), that subsequent credit amount 2 shall be allowed from the allocation amount described in clause 3 (iv) of subparagraph (A).
4 (3) Any act that reduces the amount that may be allocated 5 pursuant to paragraph (1) constitutes a change in state taxes for 6 the purpose of increasing revenues within the meaning of Section 7 3 of Article XIII A of the California Constitution and may be passed 8 by not less than two-thirds of all Members elected to each of the 9 two houses of the Legislature.
10 (4) A qualified motion picture, as defined in subdivision (k), 11 shall not be eligible for an allocation under subdivisions (a) to (j), 12 inclusive, if it receives a credit under subdivision (k) during that 13 fiscal year.
14 (j) The California Film Commission shall have the authority to 15 allocate tax credits in accordance with this section and in 16 accordance with any regulations prescribed pursuant to subdivision 17 (e) upon adoption.
18 (k) (1) For taxable years beginning on or after January 1, 2022, 19 and before January 1, 2032, there shall be allowed to a qualified 20 taxpayer a credit against the “net tax,” as defined in Section 17039, 21 subject to allocation by the California Film Commission, in an 22 amount equal to:
23 (A) For credits allocated before July 1, 2025, 20 percent or 25 24 percent, whichever is the applicable credit percentage described 25 in paragraph (4) of subdivision (a), as modified by paragraph (3) 26 of this subdivision, of the qualified expenditures for the production 27 of a qualified motion picture produced in the state at a certified 28 studio construction project.
29 (B) For credits allocated on or after July 1, 2025, 35 percent or 30 40 percent, whichever is the applicable credit percentage described 31 in paragraph (4) of subdivision (a) of Section 17053.98.1, as 32 modified by paragraph (3) of this subdivision, of the qualified 33 expenditures for the production of a qualified motion picture 34 produced in the state at a certified studio construction project. 35 (2) For purposes of this subdivision, the definitions in 36 subdivision (b) shall apply except as otherwise provided in this 37 subdivision.
38 (A) “Certified studio construction project” means a construction 39 or renovation project certified for a period of five years by the

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1 California Film Commission as having met all of the following 2 criteria:
3 (i) The project provides for the construction or renovation of 4 one or more soundstages located in the state.
5 (ii) Actual construction or renovation expenditures are not less 6 than twenty-five million dollars ($25,000,000) of actual 7 construction or renovation expenditures made over not more than 8 five continuous calendar years.
9 (iii) The construction or renovation of each certified studio 10 construction project is performed in accordance with Section 11 17053.99.
12 (iv) The construction or renovation of each certified studio 13 construction project commences pursuant to a foundation permit 14 or a structural building permit for the construction or renovation 15 that is issued after the effective date of the act adopting this 16 subdivision.
17 (v) The certified studio construction project applicant or its 18 affiliates shall not have received a California Competes Grant 19 under Section 12096.6 of the Government Code for wages or 20 investment related to construction of the studio construction 21 project.
22 (B) “Qualified motion picture” means a qualified motion picture, 23 as defined in subdivision (b), that meets all of the following 24 requirements:
25 (i) During the production period, the qualified motion picture 26 films at least 50 percent of its principal photography stage shooting 27 days on a soundstage or soundstages certified as a certified studio 28 construction project.
29 (ii) During the production period, the qualified motion picture 30 pays or incurs at least five million dollars ($5,000,000) in qualified 31 wages for filming on a soundstage or soundstages certified as a 32 certified studio construction project.
33 (iii) For taxable years beginning before January 1, 2025, is 34 produced by a qualified taxpayer that is either of the following:
35 (I) More than 50 percent owned, directly or indirectly, by the 36 same owner or owners of the soundstage or soundstages that is 37 part of a certified studio construction project on which the 38 production is filmed.
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1 (II) Entered into a contract or lease of 10 years or more with 2 the owner or owners of a certified studio construction project on 3 which the production is filmed.
4 (iv) Provides a diversity workplan that is approved by the 5 California Film Commission.
6 (C) For purposes of this subdivision, a qualified taxpayer and 7 a taxpayer include a passthrough entity and a disregarded entity. 8 (3) (A) The diversity workplan required pursuant to clause (iv) 9 of subparagraph (B) of paragraph (2) shall include all of the 10 following:
11 (i) A statement of the diversity goals the motion picture will 12 seek to achieve in terms of qualified wages paid by race, ethnicity, 13 gender, and disability status.
14 (ii) A statement of the diversity goals the motion picture will 15 seek to achieve for individuals whose wages are excluded from 16 qualified wages as set forth in clause (iv) of subparagraph (B) of 17 paragraph (21) of subdivision (b), with respect to both 18 compensation and to the representation of diversity in the creative 19 aspects of the motion picture.
20 (iii) A plan of what strategies the motion picture will employ 21 to achieve the goals in clauses (i) and (ii).
22 (B) The diversity workplan shall include goals that are broadly 23 reflective of California’s population, in terms of race, ethnicity, 24 gender, and disability status.
25 (C) The California Film Commission shall approve or reject the 26 diversity workplan of an applicant, to the extent allowed by federal 27 and state law.
28 (D) (i) The California Film Commission shall not certify any 29 tax credit under this subdivision until they have received a final 30 diversity report from the qualified motion picture applicant. 31 (ii) The final diversity report shall calculate and provide 32 evidence for the extent to which the applicant met the diversity 33 goals laid out in their diversity workplan.
34 (iii) The California Film Commission shall have the authority 35 to audit the final diversity report to determine if the diversity goals 36 set forth in the applicant’s diversity workplan for the motion picture 37 production were achieved.
38 (iv) If the California Film Commission determines that the 39 qualified motion picture applicant has met or made a good faith 40 effort to meet the diversity goals in its diversity workplan, the

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1 applicant’s credit percentage described in paragraph (1) shall be 2 increased by up to four percentage points as follows:
3 (I) By two percentage points if the California Film Commission 4 determines that the applicant has met or made a good faith effort 5 to meet the diversity goals with respect to the diversity of the 6 workforce employed by the applicant in its diversity workplan 7 statement.
8 (II) By two percentage points if the California Film Commission 9 determines that the applicant has met or made a good faith effort 10 to meet the diversity goals with respect to individuals whose wages 11 are excluded from qualified wages as set forth in clause (iv) of 12 subparagraph (B) of paragraph (21) of subdivision (b), in its 13 diversity workplan statement.
14 (E) The California Film Commission, in consultation with the 15 Governor’s Office of Business and Economic Development, shall 16 establish guidelines to evaluate diversity workplans as described 17 in this paragraph. The guidelines shall be posted on the California 18 Film Commission’s internet website.
19 (4) The credit allowed under this subdivision shall be 20 administered in accordance with subdivisions (a), (b), (c), (d), (h), 21 and (l), except that paragraph (1) of subdivision (a) shall not apply, 22 paragraph (7) of subdivision (b) shall not apply, and paragraph (2) 23 of subdivision (d) shall not apply.
24 (5) Subparagraph (A) of paragraph (2), subparagraphs (A), (B), 25 and (C) of paragraph (3), and paragraphs (4), (5), and (6) of 26 subdivision (g) shall apply.
27 (6) A conflict between this subdivision and any other 28 subdivisions in this section shall be reconciled in favor of this 29 subdivision.
30 (7) The aggregate amount of credit allocated by the California 31 Film Commission pursuant to subdivisions (a) to (j), inclusive, of 32 this section and Section 23698 shall not be reduced by the tax 33 credit allowed pursuant to this subdivision. The amount of credit 34 allowed by this subdivision shall not be limited by subdivision (i). 35 (8) (A) The credit allocated pursuant to this subdivision shall 36 be allowed for the taxable year in which the California Film 37 Commission issues a credit certificate in accordance with the 38 procedures provided for in subdivision (g) for the qualified motion 39 picture. The California Film Commission shall issue a credit 40 certificate to a qualified taxpayer upon completion of the qualified

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1 motion picture reflecting the credit amount allocated after qualified 2 expenditures have been verified.
3 (B) The California Film Commission, commencing with fiscal 4 year 2021–22, shall allocate tax credits each year to qualified 5 motion pictures meeting the criteria of this subdivision. The total 6 amount of credits that may be allocated under this subdivision is 7 one hundred fifty million dollars ($150,000,000). For taxable years 8 beginning before January 1, 2025, the amount of credit that may 9 be allocated to a qualified motion picture under this subdivision 10 shall not exceed the greater of twelve million dollars ($12,000,000), 11 or seven hundred fifty thousand dollars ($750,000) per episode, 12 for a season of a television series. For taxable years beginning on 13 or after January 1, 2025, the amount of credit that may be allocated 14 to a qualified motion picture under this subdivision shall not exceed 15 the greater of twenty-one million dollars ($21,000,000), or one 16 million three hundred thousand dollars ($1,300,000) per episode, 17 for a season of a television series. Recurring television series 18 receiving an initial allocation under this subdivision shall be 19 allocated for subsequent seasons no more than allowed under this 20 paragraph.
21 (C) In any year the tax credits under this paragraph have been 22 allocated by the California Film Commission, a qualified motion 23 picture or a recurring television series that satisfies the criteria of 24 this subdivision, but have not received an allocation of credits, 25 may apply to receive an allocation of credits pursuant to 26 subdivision (i).
27 (D) A qualified motion picture that satisfies the criteria of this 28 subdivision, other than a recurring television series described in 29 subparagraph (E) of this paragraph, that does not receive a credit 30 allocation under this subdivision because the total amount of credits 31 authorized for the program in subparagraph (B) has been allocated 32 or the qualified motion picture commenced production during the 33 sixth year the certified studio construction project has been certified 34 by the California Film Commission, or any year thereafter, may 35 apply for a credit allocation under subdivisions (a) through (j), 36 inclusive, subject to the jobs ratio enhancement in subclause (II) 37 of clause (iv) of subparagraph (D) of paragraph (2) of subdivision 38 (g).
39 (E) A recurring television series that satisfies the criteria of this 40 subdivision and that is no longer eligible for a credit allocation

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1 under this subdivision for a reason described in subparagraph (D) 2 shall receive a credit allocation under subdivisions (a) through (j), 3 inclusive, pursuant to clause (v) of subparagraph (D) of paragraph 4 (2) of subdivision (g).
5 (F) Credits shall be allocated based on the assumption that the 6 motion picture meets the diversity criteria specified in clause (iv) 7 of subparagraph (D) of paragraph (3).
8 (G) If any successor tax credit program that modifies or replaces 9 the program specified in subdivisions (a) through (j), inclusive, of 10 this section or Section 23698 is enacted, both of the following shall 11 apply:
12 (i) A qualified motion picture described in subparagraph (D) 13 may apply to receive an allocation of credits under the successor 14 program.
15 (ii) A recurring television series described in subparagraph (E) 16 shall receive an allocation of credits under the successor program. 17 (9) A qualified motion picture meeting the requirements of this 18 subdivision that receives a credit allocation during the five-year 19 period the certified studio construction project is certified by the 20 California Film Commission shall be allowed a credit under this 21 subdivision for subsequent seasons for the life of that recurring 22 television series as long as the qualified motion picture continues 23 to satisfy the criteria of this subdivision and to the extent the total 24 credit amount the California Film Commission is permitted to 25 allocate pursuant to subparagraph (B) of paragraph (8) has not 26 previously been allocated.
27 (10) Within six months of the effective date of this subdivision, 28 the California Film Commission shall:
29 (A) Establish procedures to certify a certified studio construction 30 project.
31 (B) Establish procedures to verify a qualified motion picture 32 has met the criteria established in this section for filming in a 33 certified studio construction project facility. That procedure shall 34 include a requirement that the qualified motion picture pay 0.5 35 percent of the approved credit amount to the Career Pathways 36 Training program specified in subdivision (e).
37 (C) (i) Implementation of this subdivision for the 2023–24 38 fiscal year is deemed an emergency and necessary for the 39 immediate preservation of the public peace, health, and safety, or 40 general welfare and, therefore, the California Film Commission

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1 is hereby authorized to adopt emergency regulations to implement 2 this subdivision during the 2023–24 fiscal year in accordance with 3 the rulemaking provisions of the Administrative Procedure Act 4 (Chapter 3.5 (commencing with Section 11340) of Part 1 of 5 Division 3 of Title 2 of the Government Code).
6 (ii) The California Film Commission shall adopt regulations in 7 order to implement this paragraph.
8 (iii) The California Film Commission shall not be required to 9 prepare an economic impact analysis pursuant to the Administrative 10 Procedure Act (Chapter 3.5 (commencing with Section 11340) of 11 Part 1 of Division 3 of Title 2 of the Government Code) with regard 12 to any rules and regulations adopted pursuant to this subdivision. 13 (11) In the case where the credit allowed by this subdivision 14 exceeds the taxpayer’s tax liability computed under this part, the 15 excess credit may be carried over to reduce the “net tax” in the 16 following taxable year, and succeeding eight taxable years, if 17 necessary, until the credit has been exhausted.
18 (12) Upon completion of construction or renovation of the 19 soundstage or soundstages, the certified studio construction project 20 applicant shall certify to the California Film Commission that all 21 contractors and subcontractors performing construction work on 22 the soundstage or soundstages were required to use a skilled and 23 trained workforce to perform such work in accordance with 24 subdivision (b) of Section 17053.99.
25 (13) (A) Upon completion of construction or renovation of the 26 soundstage or soundstages, the soundstage or soundstages shall 27 be continuously operated, maintained, and repaired by any of the 28 following:
29 (i) A workforce that is paid at least the general prevailing rate 30 of per diem wages for the type of work and geographic area, as 31 determined by the Director of Industrial Relations pursuant to 32 Sections 1773 and 1773.9 of the Labor Code, if such services are 33 performed by a workforce that is employed directly, or indirectly 34 through a motion picture payroll services company, by the owner 35 or affiliate of the owner of the soundstage or lessee of the 36 soundstage described in subclause (II) of clause (iii) of 37 subparagraph (B) of paragraph (2) of this subdivision. 38 (ii) A skilled and trained workforce as defined in Chapter 2.9 39 (commencing with Section 2600) of Part 1 of Division 2 of the

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1 Public Contract Code, if such services are provided by third-party 2 vendors.
3 (B) Each year following completion of construction or 4 renovation of the soundstage or soundstages that a qualified motion 5 picture is allocated a tax credit pursuant to this subdivision, the 6 certified studio construction project applicant shall certify to the 7 California Film Commission both of the following:
8 (i) The total amount of payments to third-party vendors or 9 qualified wages for operation, maintenance, and repair of the 10 certified soundstage.
11 (ii) The amount and percentage of the total amount of payments 12 to third-party vendors or qualified wages for operation, 13 maintenance, and repair of the certified soundstage performed by 14 each workforce described in subparagraph (A).
15 (C) If the percentage paid to workers in clause (i) of 16 subparagraph (A) is certified to be 90 percent of the total amount 17 under clause (i) of subparagraph (B) or greater, the qualified 18 taxpayer shall be entitled to 100 percent of the applicable credit 19 issued under this subdivision for the period. If the percentage paid 20 to workers in clause (i) of subparagraph (A) is certified to be less 21 than 90 percent of the total amount under clause (i) of subparagraph 22 (B) but greater than or equal to 75 percent of the total amount 23 under clause (i) of subparagraph (B), the qualified taxpayer shall 24 be entitled to 50 percent of the applicable credit issued under this 25 subdivision for the period. If the percentage paid to workers in 26 clause (i) of subparagraph (A) is certified to be less than 75 percent 27 of the total amount under clause (i) of subparagraph (B), the 28 qualified taxpayer shall not be entitled to any credit issued under 29 this subdivision for the applicable period.
30 (14) (A) Except as provided in subparagraph (B), the changes 31 made to this subdivision by the act adding this paragraph shall 32 apply to taxable years beginning on or after January 1, 2023. 33 (B) The changes made to subparagraphs (A) and (B) of 34 paragraph (2) by the act adding this paragraph shall apply for all 35 taxable years to any certified studio construction project that has 36 been certified, and any qualified motion picture that has been 37 allocated a credit, pursuant to this subdivision.
38 ( l) Section 41 shall not apply to the credits allowed by this 39 section.

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1 SEC. 2. Section 17053.98.1 of the Revenue and Taxation Code 2 is amended to read:
3 17053.98.1. (a) (1) For taxable years beginning on or after 4 January 1, 2025, there shall be allowed to a qualified taxpayer a 5 credit against the “net tax,” as defined in Section 17039, subject 6 to a computation and ranking by the California Film Commission 7 in subdivision (g) and the allocation amount categories described 8 in subdivision (i), in an amount equal to 35 or 40 percent, 9 whichever is the applicable credit percentage described in 10 paragraph (4), of the qualified expenditures for the production of 11 a qualified motion picture in California. A credit shall not be 12 allowed under this section for any qualified expenditures for the 13 production of a motion picture in California if a credit has been 14 claimed for those same expenditures under Section 17053.85, 15 17053.95, or 17053.98.
16 (2) Except as otherwise provided in this section, the credit shall 17 be allowed for the taxable year in which the California Film 18 Commission issues the credit certificate pursuant to subdivision 19 (g) for the qualified motion picture, but in no instance prior to July 20 1, 2025, and shall be for the applicable percentage of all qualified 21 expenditures paid or incurred by the qualified taxpayer in all 22 taxable years for that qualified motion picture.
23 (3) (A) The amount of the credit allowed to a qualified taxpayer 24 shall be limited to the amount specified in the credit certificate 25 issued to the qualified taxpayer by the California Film Commission 26 pursuant to subdivision (g).
27 (B) In determining the amount specified in the credit certificate 28 in subparagraph (A), the California Film Commission shall be 29 limited to the following amounts of qualified expenditures for each 30 qualified motion picture:
31 (i) In the case of a feature, up to one hundred twenty million 32 dollars ($100,000,000). ($120,000,000).
33 (ii) In the case of a miniseries or limited series described in 34 clause (ii) of subparagraph (A) of paragraph (19) of subdivision 35 (b), up to one hundred twenty million dollars ($100,000,000). 36 ($120,000,000).
37 (iii) In the case of a television series described in clause (iii) or 38 clause (v) of subparagraph (A) of paragraph (19) of subdivision 39 (b), up to one hundred twenty million dollars ($100,000,000) 40 ($120,000,000) per season.

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1 (iv) In the case of an independent film, up to twenty million

2 dollars ($20,000,000).
3 (4) For purposes of paragraphs (1) and (2), the applicable credit 4 percentage shall be as follows:
5 (A) Thirty-five percent of the qualified expenditures attributable 6 to the production of a qualified motion picture in California, 7 including, but not limited to, a feature or a television series that 8 relocated to California that is in its second or subsequent years of 9 receiving a tax credit allocation pursuant to this section, or Section 10 17053.85, 17053.95, or 17053.98.
11 (B) Forty percent of the qualified expenditures attributable to 12 the production of a qualified motion picture in California where 13 the qualified motion picture is a television series that relocated to 14 California in its first year of receiving a tax credit allocation 15 pursuant to this section.
16 (C) Thirty-five percent of the qualified expenditures attributable 17 to the production of a qualified motion picture that is an 18 independent film.
19 (D) Additional credits shall be allowed for the production of a 20 qualified motion picture which applicable credit percentage is 21 determined pursuant to subparagraph (A), in an aggregate amount 22 not to exceed 5 percent of the qualified expenditures under that 23 subparagraph, as follows:
24 (i) (I) Five percent of qualified expenditures, excluding qualified 25 wages described in subparagraph (E), relating to original 26 photography outside the Los Angeles zone.
27 (II) For purposes of this clause and subparagraph (E):
28 (ia) “Applicable period” means the period that commences with 29 preproduction and ends when original photography concludes. The 30 applicable period includes the time necessary to strike a remote 31 location and return to the Los Angeles zone.
32 (ib) “Los Angeles zone” means the area within a circle 30 miles 33 in radius from Beverly Boulevard and La Cienega Boulevard, Los 34 Angeles, California, and includes Agua Dulce, Castaic, including 35 Castaic Lake, Leo Carrillo State Beach, Ontario International 36 Airport, Piru, and Pomona, including the Los Angeles County 37 Fairgrounds. The Metro-Goldwyn-Mayer, Inc. Conejo Ranch 38 property is within the Los Angeles zone.
39 (ic) “Original photography” includes principal photography and 40 reshooting original footage.

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1 (id) “Qualified expenditures relating to original photography

2 outside the Los Angeles zone” means amounts paid or incurred 3 during the applicable period for tangible personal property 4 purchased or leased and used or consumed outside the Los Angeles 5 zone and relating to original photography outside the Los Angeles 6 zone and qualified wages paid for services performed outside the 7 Los Angeles zone and relating to original photography outside the 8 Los Angeles zone.
9 (ii) Five percent of the qualified expenditures relating to 10 qualified visual effects attributable to the production of a qualified 11 motion picture in California.
12 (E) (i) Notwithstanding subparagraph (D), an amount equal to 13 10 percent of qualified wages paid for services performed relating 14 to original photography outside of the Los Angeles zone to 15 qualified individuals who reside in California but outside the Los 16 Angeles zone shall be allowed as an additional credit for the 17 production of a qualified motion picture which applicable credit 18 percentage is determined pursuant to subparagraph (A) or (C). 19 (ii) Notwithstanding subparagraph (D), an amount equal to 5 20 percent of qualified wages paid for services performed relating to 21 original photography outside of the Los Angeles zone to qualified 22 individuals who reside in California but outside the Los Angeles 23 zone shall be allowed as an additional credit for the production of 24 a qualified motion picture which applicable credit percentage is 25 determined pursuant to subparagraph (B).
26 (F) Notwithstanding subparagraph (D), an amount up to 2 27 percent of qualified expenditures, as determined by the California 28 Film Commission, for qualified productions that employ trainees 29 from a Career Pathways Program pursuant to subparagraph (E) 30 of paragraph (10) of subdivision (g).
31 (b) For purposes of this section:
32 (1) “Ancillary product” means any article for sale to the public 33 that contains a portion of, or any element of, the qualified motion 34 picture.
35 (2) “Budget” means an estimate of all expenses paid or incurred 36 during the production period of a qualified motion picture. It shall 37 be the same budget used by the qualified taxpayer and production 38 company for all qualified motion picture purposes.

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1 (3) “Clip use” means a use of any portion of a motion picture,

2 other than the qualified motion picture, used in the qualified motion 3 picture.
4 (4) “Credit certificate” means the certificate issued by the 5 California Film Commission pursuant to subparagraph (D) of 6 paragraph (3) of subdivision (g).
7 (5) “Diversity workplan checklist” means a checklist developed 8 by regulation by the California Film Commission that may include 9 consideration of inclusive hiring above the line, inclusive hiring 10 below the line, equity education, industry capacity building and 11 supplier diversity as part of any diversity workplan. 12 (6) (A) “Employee fringe benefits” means the amount allowable 13 as a deduction under this part to the qualified taxpayer involved 14 in the production of the qualified motion picture, exclusive of any 15 amounts contributed by employees, for any year during the 16 production period with respect to any of the following:
17 (i) Employer contributions under any pension, profit sharing, 18 annuity, or similar plan.
19 (ii) Employer-provided coverage under any accident or health 20 plan for employees.
21 (iii) The employer’s cost of life or disability insurance provided 22 to employees.
23 (B) Any amount treated as wages under clause (i) of 24 subparagraph (A) of paragraph (21) shall not be taken into account 25 under this paragraph.
26 (7) “Independent film” means a motion picture with a minimum 27 budget of one million dollars ($1,000,000) that is produced by a 28 company that is not publicly traded and publicly traded companies 29 do not own, directly or indirectly, more than 25 30 percent of the 30 producing company.
31 (8) “Jobs ratio” means the amount of qualified wages paid to 32 qualified individuals divided by the amount of tax credit, not 33 including any additional credit allowed pursuant to subparagraphs 34 (D) and (E) of paragraph (4) of subdivision (a), as computed by 35 the California Film Commission. For the purposes of the 36 calculation of the jobs ratio only, 70 percent of qualified 37 expenditures for visual effects paid to third-party vendors for work 38 performed in California shall be deemed to be qualified wages 39 paid to a qualified individual.

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1 (9) “Licensing” means any grant of rights to distribute the

2 qualified motion picture, in whole or in part.
3 (10) “New use” means any use of a motion picture in a medium 4 other than the medium for which it was initially created. 5 (11) “Pilot for a new television series” means the initial episode 6 produced for a proposed television series.
7 (12) (A) “Postproduction” means the final activities in a 8 qualified motion picture’s production, including editing, foley 9 recording, automatic dialogue replacement, sound editing, scoring, 10 music track recording by musicians and music editing, beginning 11 and end credits, negative cutting, negative processing and 12 duplication, the addition of sound and visual effects, sound mixing, 13 film-to-tape transfers, encoding, and color correction. 14 (B) “Postproduction” does not include the manufacture or 15 shipping of release prints or their equivalent.
16 (13) “Preproduction” means the process of preparation for actual 17 physical production which begins after a qualified motion picture 18 has received a firm agreement of financial commitment, or is 19 greenlit, with, for example, the establishment of a dedicated 20 production office, the hiring of key crew members, and includes, 21 but is not limited to, activities that include location scouting and 22 execution of contracts with vendors of equipment and stage space. 23 (14) “Principal photography” means the phase of production 24 during which the motion picture is actually shot, as distinguished 25 from preproduction and postproduction.
26 (15) “Production period” means the period beginning with 27 preproduction and ending upon completion of postproduction. 28 (16) “Qualified entity” means a personal service corporation as 29 defined in Section 269A(b)(1) of the Internal Revenue Code, a 30 payroll services corporation, or any entity receiving qualified wages 31 with respect to services performed by a qualified individual. 32 (17) “Qualified expenditures” means amounts paid or incurred 33 for tangible personal property purchased or leased, and used, within 34 this state in the production of a qualified motion picture and 35 payments, including qualified wages, for services performed within 36 this state in the production of a qualified motion picture. 37 (18) (A) “Qualified individual” means any individual who 38 performs services during the production period in an activity related 39 to the production of a qualified motion picture.

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1 (B) “Qualified individual” shall not include either of the

2 following:
3 (i) Any individual related to the qualified taxpayer as described 4 in subparagraph (A), (B), or (C) of Section 51(i)(1) of the Internal 5 Revenue Code.
6 (ii) Any 5-percent owner, as defined in Section 416(i)(1)(B) of 7 the Internal Revenue Code, of the qualified taxpayer. 8 (19) (A) “Qualified motion picture” means a motion picture 9 that is produced for distribution to the general public, regardless 10 of medium, that is one of the following:
11 (i) A feature with a minimum production budget of one million 12 dollars ($1,000,000).
13 (ii) A miniseries or limited series consisting of two or more 14 episodes, each longer than 40 minutes of running time, exclusive 15 of commercials, that is produced in California, with a minimum 16 production budget of one million dollars ($1,000,000) per episode. 17 (iii) An independent film.
18 (iv) A television series that relocated to California. 19 (v) A pilot for a new live action or animated television series 20 that is at least 20 minutes of running time, exclusive of 21 commercials, that is produced in California, and with a minimum 22 production budget of one million dollars ($1,000,000). 23 (vi) A live action or animated series, averaging across a season 24 at least 20 minutes of running time per episode, exclusive of 25 commercials, that is produced in California, with a minimum 26 production budget of one million dollars ($1,000,000) per episode. 27 (vii) An animated film that is produced in California, with a 28 minimum production budget of one million dollars ($1,000,000). 29 (viii) A large-scale competition show, not including traditional 30 reality, game shows, talk shows, or docufollow television 31 programming, that is produced in California, with a minimum 32 production budget of one million dollars ($1,000,000) per episode. 33 (B) To qualify as a “qualified motion picture,” all of the 34 following conditions shall be satisfied:
35 (i) At least 75 percent of the principal photography days occur 36 wholly in California or 75 percent of the production budget is 37 incurred for payment for services performed within the state and 38 the purchase or rental of property used within the state. 39 (ii) Production of the qualified motion picture is completed 40 within 30 months from the date on which the qualified taxpayer’s

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1 application is approved by the California Film Commission. For 2 purposes of this section, a qualified motion picture is “completed” 3 when the process of postproduction has been finished. 4 (iii) The copyright for the motion picture is registered with the 5 United States Copyright Office pursuant to Title 17 of the United 6 States Code.
7 (iv) (I) Except as provided in subclause (II), principal 8 photography of the qualified motion picture commences after the 9 date on which the application is approved by the California Film 10 Commission, but no later than 180 days after the date of that 11 approval if the qualified motion picture has a budget with qualified 12 expenditures of less than one hundred million dollars 13 ($100,000,000), and no later than 240 days after the date of that 14 approval in the case of a qualified motion picture with a budget 15 of qualified expenditures with at least one hundred million dollars 16 ($100,000,000), unless death, disability, or disfigurement of the 17 director or of a principal cast member; an act of God, including, 18 but not limited to, fire, flood, earthquake, storm, hurricane, or other 19 natural disaster; terrorist activities; or government sanction has 20 directly prevented a production’s ability to begin principal 21 photography within the prescribed 180- or 240-day commencement 22 period.
23 (II) Notwithstanding subclause (I), a production that has not 24 previously received an allocation under this section or Section 25 17053.85, 17053.95, or 17053.98, and that completed principal 26 photography of the previous season more than 48 months prior to 27 the application for a credit allocation under this section, shall be 28 deemed not to have commenced principal photography prior to 29 the date on which the application for an allocation of credit under 30 this section is approved by the California Film Commission. 31 (III) Notwithstanding subclauses (I) and (II), a television series 32 that did not commence principal photography prior to July 1, 2025, 33 and applied for but did not receive an allocation under this section 34 for its first season filming in California and makes an application 35 for allocation of credit for its second season filming in California 36 shall be deemed not to have commenced principal photography 37 prior to the date on which the application for an allocation of 38 credit under this section is approved by the California Film 39 Commission.

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1 (v) (I) At least 75 percent of production costs for picture editing 2 and postproduction sound labor and services shall be incurred in 3 California.
4 (II) This requirement shall only apply to a qualified motion 5 picture applying for an allocation of credits under this section 6 pursuant to subparagraph (G) of paragraph (8) of subdivision (k) 7 of Section 17053.98 or Section 23698.
8 (vi) Provides a diversity workplan checklist.
9 (C) For the purposes of subparagraph (A), in computing the 10 total wages paid or incurred for the production of a qualified 11 motion picture, all amounts paid or incurred by all persons or 12 entities that share in the costs of the qualified motion picture shall 13 be aggregated.
14 (D) “Qualified motion picture” shall not include commercial 15 advertising, music videos, a motion picture produced for private 16 noncommercial use, such as weddings, graduations, or as part of 17 an educational course and made by students, a news program, 18 current events or public events program, talk show, game show, 19 sporting event or activity, awards show, telethon or other 20 production that solicits funds, reality television program, except 21 as specified in clause (ix) of subparagraph (A), clip-based 22 programming if more than 50 percent of the content is comprised 23 of licensed footage, documentaries, variety programs, daytime 24 dramas, strip shows, or any production that falls within the 25 recordkeeping requirements of Section 2257 of Title 18 of the 26 United States Code.
27 (20) (A) “Qualified taxpayer” means a taxpayer who has paid 28 or incurred qualified expenditures, participated in the Career 29 Readiness requirement in Section 17053.95, and has been issued 30 a credit certificate by the California Film Commission pursuant 31 to subdivision (g).
32 (B) In the case of any pass-thru entity, the determination of 33 whether a taxpayer is a qualified taxpayer under this section shall 34 be made at the entity level and any credit under this section is not 35 allowed to the pass-thru entity, but shall be passed through to the 36 partners or shareholders in accordance with applicable provisions 37 of Part 10 (commencing with Section 17001) or Part 11 38 (commencing with Section 23001). For purposes of this paragraph, 39 “pass-thru entity” means any entity taxed as a partnership or “S” 40 corporation.

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1 (21) “Qualified visual effects” means visual effects where at 2 least 75 percent or a minimum of ten million dollars ($10,000,000) 3 of the qualified expenditures for the visual effects are paid or 4 incurred in California.
5 (22) (A) “Qualified wages” means all of the following:
6 (i) Any wages subject to withholding under Division 6 7 (commencing with Section 13000) of the Unemployment Insurance 8 Code that were paid or incurred by any taxpayer involved in the 9 production of a qualified motion picture with respect to a qualified 10 individual for services performed on the qualified motion picture 11 production within this state.
12 (ii) The portion of any employee fringe benefits paid or incurred 13 by any taxpayer involved in the production of the qualified motion 14 picture that are properly allocable to qualified wage amounts 15 described in clauses (i), (iii), and (iv).
16 (iii) Any payments made to a qualified entity for services 17 performed in this state by qualified individuals within the meaning 18 of paragraph (17).
19 (iv) Remuneration paid to an independent contractor who is a 20 qualified individual for services performed within this state by that 21 qualified individual.
22 (B) “Qualified wages” shall not include any of the following:
23 (i) Expenses, including wages, related to new use, reuse, clip 24 use, licensing, secondary markets, or residual compensation, or 25 the creation of any ancillary product, including, but not limited to, 26 a soundtrack album, toy, game, trailer, or teaser.
27 (ii) Expenses, including wages, paid or incurred with respect to 28 acquisition, development, turnaround, or any rights thereto. 29 (iii) Expenses, including wages, related to financing, overhead, 30 marketing, promotion, or distribution of a qualified motion picture. 31 (iv) Expenses, including wages, paid per person per qualified 32 motion picture for writers, directors, music directors, music 33 composers, music supervisors, producers, and performers, other 34 than background actors with no scripted lines.
35 (23) (A) “Recurring television allocation amount” means the 36 sum of the base year allocation and the product of all of the 37 following:
38 (i) The base year allocation.
39 (ii) The number of subsequent years.
40 (iii) Three percent.

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1 (B) For purposes of this paragraph, the following definitions 2 apply:
3 (i) “Base year allocation” means the amount received by the 4 recurring television series in its fiscal year 2025–26 Credit 5 Allocation Letter or Letters, or if no amounts were reserved in 6 fiscal year 2025–26, in the next fiscal year in which a Credit 7 Allocation Letter or Letters were received.
8 (ii) “The number of subsequent years” means the number of 9 full or partial fiscal years that have elapsed since the fiscal year in 10 which the base year allocation was made.
11 (24) “Recurring television series” means any television series 12 that was previously approved and issued a credit allocation letter 13 under this section.
14 (25) “Residual compensation” means supplemental
15 compensation paid at the time that a motion picture is exhibited 16 through new use, reuse, clip use, or in secondary markets, as 17 distinguished from payments made during production.
18 (26) “Reuse” means any use of a qualified motion picture in the 19 same medium for which it was created, following the initial use 20 in that medium.
21 (27) “Secondary markets” means media in which a qualified 22 motion picture is exhibited following the initial media in which it 23 is exhibited.
24 (28) “Television series that relocated to California” means a 25 television series, without regard to episode length or initial media 26 exhibition, with a minimum production budget of one million 27 dollars ($1,000,000) per episode, that filmed at least 75 percent of 28 principal photography days in its most recent season outside of 29 California or has filmed all seasons outside of California and for 30 which the taxpayer certifies that the credit provided pursuant to 31 this section is the primary reason for relocating to California. 32 (c) (1) Notwithstanding any other law, a qualified taxpayer 33 may sell any credit allowed under this section that is attributable 34 to an independent film, as defined in paragraph (7) of subdivision 35 (b), to an unrelated party.
36 (2) The qualified taxpayer shall report to the Franchise Tax 37 Board prior to the sale of the credit, in the form and manner 38 specified by the Franchise Tax Board, all required information 39 regarding the purchase and sale of the credit, including the social 40 security or other taxpayer identification number of the unrelated

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1 party to whom the credit has been sold, the face amount of the 2 credit sold, and the amount of consideration received by the 3 qualified taxpayer for the sale of the credit.
4 (3) In the case where the credit allowed under this section 5 exceeds the “net tax,” the excess credit may be carried over to 6 reduce the “net tax” in the following taxable year, and succeeding 7 eight taxable years, if necessary, until the credit has been exhausted. 8 (4) A credit shall not be sold pursuant to this subdivision to 9 more than one taxpayer, nor may the credit be resold by the 10 unrelated party to another taxpayer or other party.
11 (5) A party that has acquired tax credits under this subdivision 12 shall be subject to the requirements of this section. 13 (6) In no event may a qualified taxpayer assign or sell any tax 14 credit to the extent the tax credit allowed by this section is claimed 15 on any tax return of the qualified taxpayer.
16 (7) In the event that both the taxpayer originally allocated a 17 credit under this section by the California Film Commission and 18 a taxpayer to whom the credit has been sold both claim the same 19 amount of credit on their tax returns, the Franchise Tax Board may 20 disallow the credit of either taxpayer, so long as the statute of 21 limitations upon assessment remains open.
22 (8) Chapter 3.5 (commencing with Section 11340) of Part 1 of 23 Division 3 of Title 2 of the Government Code does not apply to 24 any standard, criterion, procedure, determination, rule, notice, or 25 guideline established or issued by the Franchise Tax Board 26 pursuant to this subdivision.
27 (9) Subdivision (g) of Section 17039 shall not apply to any 28 credit sold pursuant to this subdivision.
29 (10) For purposes of this subdivision, the unrelated party or 30 parties that purchase a credit pursuant to this subdivision shall be 31 treated as a qualified taxpayer pursuant to paragraph (1) of 32 subdivision (a).
33 (d) (1) No credit shall be allowed pursuant to this section unless 34 the qualified taxpayer provides the following to the California 35 Film Commission:
36 (A) Identification of each qualified individual.
37 (B) The specific start and end dates of production. 38 (C) The total wages paid.
39 (D) The total amount of qualified wages paid to qualified 40 individuals.

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1 (E) Aggregate data for individuals whose wages are excluded 2 from qualified wages by clause (iv) of subparagraph (B) of 3 paragraph (22) of subdivision (b), including their gender, ethnic, 4 and racial makeup.
5 (F) The copyright registration number, as reflected on the 6 certificate of registration issued under the authority of Section 410 7 of Title 17 of the United States Code, relating to registration of 8 claim and issuance of certificate. The registration number shall be 9 provided on the return claiming the credit.
10 (G) The total amounts paid or incurred to purchase or lease 11 tangible personal property used in the production of a qualified 12 motion picture.
13 (H) Information to substantiate its qualified expenditures. 14 (I) Information required by the California Film Commission 15 under regulations promulgated pursuant to subdivision (g) 16 necessary to verify the amount of credit claimed.
17 (J) Data regarding the diversity of the workforce employed by 18 the applicant on the qualified motion picture, as described in 19 subdivision (g).
20 (K) Documentation verifying completion of the Career 21 Readiness requirement.
22 (L) Documentation verifying that the qualified taxpayer paid 23 the Career Pathways Program fee.
24 (2) (A) Based on the information provided in paragraph (1), 25 the California Film Commission shall recompute the jobs ratio 26 previously computed in subdivision (g) and compare this 27 recomputed jobs ratio to the jobs ratio that the qualified taxpayer 28 previously listed on the application submitted pursuant to 29 subdivision (g).
30 (B) (i) If the California Film Commission determines that the 31 jobs ratio has been reduced by more than 10 percent for a qualified 32 motion picture, the California Film Commission shall reduce the 33 amount of credit allowed by an equal percentage, unless the 34 qualified taxpayer demonstrates, and the California Film 35 Commission determines, that reasonable cause exists for the jobs 36 ratio reduction.
37 (ii) If the California Film Commission determines that the jobs 38 ratio has been reduced by more than 20 percent for a qualified 39 motion picture, the California Film Commission shall not accept 40 an application described in subdivision (g) from that qualified

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1 taxpayer or any member of the qualified taxpayer’s controlled 2 group for a period of not less than one year from the date of that 3 determination, unless the qualified taxpayer demonstrates, and the 4 California Film Commission determines, that reasonable cause 5 exists for the jobs ratio reduction.
6 (C) For the purposes of this paragraph, “reasonable cause” 7 means unforeseen circumstances beyond the control of the qualified 8 taxpayer, such as, but not limited to, the cancellation of a television 9 series prior to the completion of the scheduled number of episodes 10 or other similar circumstances as determined by the California 11 Film Commission in regulations to be adopted pursuant to 12 subdivision (e).
13 (e) (1) (A) Subject to the Administrative Procedure Act 14 (Chapter 3.5 (commencing with Section 11340) of Part 1 of 15 Division 3 of Title 2 of the Government Code), the California Film 16 Commission shall prescribe rules and regulations to carry out the 17 purposes of this section, including, but not limited to, the following:
18 (i) Subparagraph (D) of paragraph (4) of subdivision (a) and 19 clause (iv) of subparagraph (D) of paragraph (2) of subdivision 20 (g).
21 (ii) Any rules and regulations necessary to establish procedures, 22 processes, requirements, and applications.
23 (iii) (I) Continuing a Career Pathways Program established 24 pursuant to subdivision (e) of Sections 17053.98 and 23698 23698, 25 and pursuant to paragraph (10) of subdivision (g) of this section 26 and Section 23698.1, to fund technical skills training for individuals 27 from underserved communities for entry into film and television 28 jobs. The program shall be funded by a fee equal to 0.5 percent of 29 the approved credit amount for a qualified motion picture. The 30 program shall work with nonprofit organizations that have an 31 established record of training and job placement in the 32 entertainment industry, focus on training individuals from 33 traditionally underserved communities, and offer training courses 34 focused on skilled, technical positions that would be eligible for 35 qualified wages if performed on a qualified motion picture as well 36 as administrative- and industry-related technical occupations or 37 soft skills training for the motion picture industry. 38 (II) Notwithstanding subclause (I), independent films are 39 required to pay a fee equal to 0.25 percent of the approved credit 40 amount for a qualified motion picture.

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1 (iv) (I) Beginning January 1, 2028, the California Film 2 Commission, in collaboration with labor and industry stakeholders, 3 has the authority to increase the Career Pathways Training program 4 fee by 0.25 percent per year, up to 1 percent of the approved credit 5 amount for a qualified motion picture, based on evaluation of 6 available information, including, but not limited to, the number of 7 jobs available, job growth in the industry, and information included 8 in the annual reports of the Career Pathways Training program 9 required pursuant to paragraph (10) (11) of subdivision (g). The 10 evaluation shall be included in the annual report to the Legislature. 11 (II) Independent films are not subject to an increase to the fee 12 pursuant to subclause (I).
13 (B) Notwithstanding any other law, prior to preparing a notice 14 of proposed action pursuant to Section 11346.4 of the Government 15 Code and prior to making any revision to the proposed regulation 16 other than a change that is nonsubstantial or solely grammatical 17 in nature, the Governor’s Office of Business and Economic 18 Development shall first approve the proposed regulation or 19 proposed change to a proposed regulation regarding allocating the 20 credit pursuant to subdivision (i), computing the jobs ratio as 21 described in subdivisions (d) and (g), and defining “reasonable 22 cause” pursuant to subparagraph (C) of paragraph (2) of subdivision 23 (d).
24 (2) The California Film Commission shall not be required to 25 prepare an economic impact analysis pursuant to the Administrative 26 Procedure Act (Chapter 3.5 (commencing with Section 11340) of 27 Part 1 of Division 3 of Title 2 of the Government Code) with regard 28 to any rules and regulations adopted pursuant to this subdivision. 29 (f) If the qualified taxpayer fails to provide the copyright 30 registration number as required in subparagraph (E) of paragraph 31 (1) of subdivision (d), the credit shall be disallowed and assessed 32 and collected under Section 19051 until the procedures are 33 satisfied.
34 (g) For purposes of this section, the California Film Commission 35 shall do all of the following:
36 (1) Subject to the requirements of subparagraphs (A) to (E), 37 inclusive, of paragraph (2), on or after July 1, 2025, and before 38 July 1, 2030, in four or more allocation periods per fiscal year, 39 allocate tax credits to applicants.

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1 (2) (A) Establish a procedure for applicants to file with the 2 California Film Commission a written application, on a form jointly 3 prescribed by the California Film Commission and the Franchise 4 Tax Board for the allocation of the tax credit. The application shall 5 include, but not be limited to, all of the following information:
6 (i) The budget for the motion picture production.
7 (ii) The number of production days.
8 (iii) A financing plan for the production.
9 (iv) The diversity of the workforce employed by the applicant, 10 including, but not limited to, the ethnic and racial makeup of the 11 individuals employed by the applicant during the production of 12 the qualified motion picture, to the extent possible. 13 (v) The amount of qualified wages the applicant expects to pay 14 to qualified individuals.
15 (vi) The amount of tax credit the applicant computes the 16 qualified motion picture will receive, applying the applicable credit 17 percentages described in paragraph (4) of subdivision (a). 18 (vii) A statement establishing that the tax credit described in 19 this section is a significant factor in the applicant’s choice of 20 location for the qualified motion picture. The statement shall 21 include information about whether the qualified motion picture is 22 at risk of not being filmed or specify the jurisdiction or jurisdictions 23 in which the qualified motion picture will be located in the absence 24 of the tax credit. The statement shall be signed by an officer or 25 executive of the applicant.
26 (viii) The applicant’s written policy against unlawful harassment, 27 including, but not limited to, sexual harassment, which includes 28 procedures for reporting and investigating harassment claims, a 29 phone number for an individual who will be responsible for 30 receiving harassment claims, and a statement that the company 31 will not retaliate against an individual who reports harassment. 32 The applicant shall also indicate how the policy will be distributed 33 to employees and include a summary of education training 34 resources, including the prohibition against, and prevention and 35 correction of, sexual harassment and remedies available. 36 (ix) If applicable, summary of the applicant’s voluntary 37 programs to increase the representation of minorities and women 38 in the job classifications that are not included in qualified wages 39 as set forth in clause (iv) of subparagraph (B) of paragraph (22) 40 of subdivision (b) and information about how these programs are

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1 publicized to interested parties. The officer or executive referenced 2 in clause (xi) who is signing the statement shall provide additional 3 information about these programs, if needed and upon request, to 4 the California Film Commission.
5 (x) Any other information deemed relevant by the California 6 Film Commission or the Franchise Tax Board.
7 (B) Establish criteria, consistent with the requirements of this 8 section, for allocating tax credits.
9 (C) Determine and designate applicants who meet the 10 requirements of this section.
11 (D) For purposes of allocating the credit amounts subject to the 12 categories described in subdivision (i) in any fiscal year, the 13 California Film Commission shall do all of the following:
14 (i) For each allocation date and for each category, list each 15 applicant from highest to lowest according to the jobs ratio as 16 computed by the California Film Commission.
17 (ii) Subject to the applicable credit percentage, allocate the credit 18 to each applicant according to the highest jobs ratio, working down 19 the list, until the credit amount is exhausted.
20 (iii) (I) Pursuant to regulations adopted pursuant to subdivision 21 (e), the California Film Commission may increase the jobs ratio 22 by up to 25 percent if a qualified motion picture increases economic 23 activity in California according to criteria developed by the 24 California Film Commission that would include, but not be limited 25 to, those factors as, the amount of the production and 26 postproduction spending in California, the utilization employment 27 of scoring musicians in California, and other criteria measuring 28 economic impact in California as determined by the California 29 Film Commission. The criteria developed by the California Film 30 Commission shall not assess fewer points for the employment of 31 scoring musicians in California than any other category within 32 the jobs ratio bonus.
33 (II) For qualified motion pictures that are described in clause 34 (i) of subparagraph (G) of paragraph (8) of subdivision (k) of 35 Section 17053.98 and Section 23698, the jobs ratio shall be equal 36 to the product of the jobs ratio calculated in paragraph (8) of 37 subdivision (b) and 133 percent.
38 (iv) (I) Notwithstanding any other law, any television series, 39 relocating television series, or any new television series based on 40 a pilot for a new television series that has been approved and issued

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1 a credit allocation by the California Film Commission under this 2 section, Section 17053.85, 17053.95, 17053.98, 23685, 23695, 3 23698, or 23698.1 shall be issued a credit for each subsequent 4 season, for the life of that television series whenever credits are 5 allocated within a fiscal year.
6 (II) Notwithstanding subclause (I), a recurring television series 7 that does not request a credit allocation within 18 months from the 8 date of completion of principal photography of the previous season 9 is deemed to have waived the credit allocation guarantee provided 10 by this clause and must reapply for a credit allocation. The 11 California Film Commission may by regulation determine the 12 appropriate priority to be given in a reapplication process for a 13 recurring series reapplying pursuant to this subclause. 14 (III) The California Film Commission shall limit the amount of 15 credits any recurring television series, including a recurring 16 television series under subdivision (k) of Section 17053.98, 17 receives in a subsequent season to no more than the recurring 18 television allocation amount.
19 (IV) In the event that insufficient tax credits are available to 20 fund all recurring television series pursuant to this clause for any 21 fiscal year or in the event the California Film Commission projects, 22 in collaboration with the Department of Finance, that there will 23 be insufficient tax credits available to fund all recurring television 24 series in either of the subsequent two fiscal years, the California 25 Film Commission shall make the following adjustments in the 26 order given until the shortfall, or any projected shortfall for the 27 two subsequent fiscal years, for recurring television series is 28 eliminated:
29 (V) (ia) Notwithstanding clause (iii) of subparagraph (A) of 30 paragraph (2) of subdivision (i), the California Film Commission 31 may redirect up to 100 percent of the credit amounts allocated to 32 the relocating television series category to recurring television 33 series for that fiscal year until the shortfall or projected shortfall 34 is eliminated.
35 (ib) Notwithstanding clause (iv) of subparagraph (A) of 36 paragraph (2) of subdivision (i), the California Film Commission 37 may redirect up to 100 percent of the credit amounts allocated to 38 a new television series to recurring television series for that fiscal 39 year until the shortfall or projected shortfall is eliminated.

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1 (ic) Notwithstanding clause (ii) of subparagraph (A) of 2 paragraph (2) of subdivision (i), the California Film Commission 3 may redirect up to 100 percent of the credit allocations from the 4 features category to the recurring television series category for 5 that fiscal year until the shortfall is eliminated.
6 (id) Allocate up to 25 percent of total credit allocations that 7 would otherwise be allocated in the 2029–30 fiscal year to recurring 8 television series in the current fiscal year until the shortfall is 9 eliminated. Any amounts transferred for allocation in the current 10 fiscal year shall be subtracted from the amount allowed to be 11 allocated in the 2029–30 fiscal year as specified in subdivision (i). 12 Notwithstanding paragraph (3), the credit allocations that are 13 subtracted from the 2029–30 fiscal year shall not be certified until 14 July 1, 2030, or later.
15 (ie) The California Film Commission shall consult with the 16 qualified taxpayers who are producing the recurring television 17 series for purposes of negotiating a minimally impactful reduction 18 in the amount of credits awarded to each recurring television series 19 for that fiscal year until the shortfall is eliminated. 20 (E) Subject to the annual cap and the allocation credit amounts 21 based on categories described in subdivision (i), allocate an 22 aggregate amount of credits under this section and Section 23698.1, 23 and allocate any carryover of unallocated or unused credits from 24 prior years and Sections 17053.85, 17053.95, 17053.98, 23685, 25 23695, and 23698 and the amount of any credits reduced pursuant 26 to paragraph (2) of subdivision (d).
27 (3) Certify tax credits allocated to qualified taxpayers and do 28 all of the following:
29 (A) Establish a verification procedure to do both of the 30 following:
31 (i) Update the information in subparagraph (A) of paragraph 32 (2) of subdivision (g), including, but not limited to, the amounts 33 of qualified expenditures paid or incurred by the applicant. 34 (ii) Ensure that the final safety evaluation report required 35 pursuant to Section 9152 of the Labor Code has been submitted. 36 (B) Establish audit requirements that shall be satisfied before a 37 credit certificate may be issued by the California Film Commission. 38 (C) Issue a credit certificate to a qualified taxpayer upon 39 completion of the qualified motion picture reflecting the credit 40 amount allocated after qualified expenditures have been verified

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1 and the jobs ratio computed under this section. The amount of 2 credit shown on the credit certificate shall not exceed the amount 3 of credit allocated to that qualified taxpayer pursuant to this section. 4 (D) (i) Notwithstanding any other law, the California Film 5 Commission shall certify a credit amount equal to 96 percent of 6 the total credit allocated to the qualified taxpayer, unless the 7 qualified taxpayer chooses to submit a diversity workplan and the 8 California Film Commission determines that the qualified taxpayer 9 has met or made a good-faith effort to meet the diversity goals in 10 its diversity workplan, pursuant to clause (ii).
11 (ii) The California Film Commission shall certify an additional 12 credit amount equal to 4 percent of the total credit allocated to the 13 qualified taxpayer if a qualified taxpayer submits to the California 14 Film Commission, in the form and manner required by the 15 commission, all of the following:
16 (I) A diversity workplan within 30 days after receiving a credit 17 allocation letter. The workplan shall be consistent with the diversity 18 workplan checklist to address diversity and be broadly reflective 19 of California’s population in terms of race, ethnicity, gender, and 20 disability status, and shall include all of the following:
21 (ia) A statement of the diversity goals the motion picture will 22 seek to achieve in terms of qualified wages.
23 (ib) A statement of the diversity goals the motion picture will 24 seek to achieve for individuals whose wages are excluded from 25 qualified wages.
26 (ic) A plan of what strategies the motion picture will employ to 27 achieve the goals in this subclause and subclause (II). 28 (id) Other requirements as the California Film Commission 29 shall determine by regulation.
30 (II) An interim assessment on the qualified taxpayer’s efforts 31 to meet the diversity workplan prior to the commencement of 32 principal photography. Upon review pursuant to a procedure 33 prescribed in regulations, the California Film Commission shall 34 determine whether the interim assessment indicates that the 35 qualified motion picture is making a good-faith effort to meet the 36 goals of the diversity workplan and shall notify the qualified motion 37 picture of its findings.
38 (III) A final diversity assessment that includes information about 39 how the project met or made a good-faith effort to meet the 40 diversity workplan, including, but not limited to, aggregate data,

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1 voluntarily self-reported by individuals whose wages are included 2 in qualified wages and individuals whose wages are excluded from 3 qualified wages, with regard to their race, ethnicity, gender, and 4 disability status.
5 (iii) The California Film Commission, in consultation with the 6 Governor’s Office of Business and Economic Development, shall 7 establish guidelines to evaluate diversity workplans as described 8 in this subparagraph. The guidelines shall be posted on the 9 California Film Commission’s internet website.
10 (iv) The California Film Commission shall approve or reject 11 the diversity workplan of an applicant, to the extent allowed by 12 federal and state law.
13 (v) This subparagraph shall not apply to an independent film 14 with qualified expenditures of ten million dollars ($10,000,000) 15 or less.
16 (vi) The requirements of this subparagraph shall not apply to a 17 recurring television series receiving an allocation of credits under 18 this section pursuant to clause (ii) of subparagraph (G) of paragraph 19 (8) of subdivision (k) of Section 17053.98 or Section 23698 and 20 fulfills the diversity workplan and report requirements pursuant 21 to subdivision (k) of Section 17053.98 or Section 23698. 22 (vii) A qualified motion picture described in subparagraph (D) 23 of paragraph (8) of subdivision (k) of Section 17053.98 or Section 24 23698 that applies for an allocation of credits under this section 25 shall be subject to the requirements of this subparagraph and not 26 those of clause (iv) of subparagraph (B) of paragraph (2) of 27 subdivision (k) of Sections 17053.98 and 23698 and paragraph (3) 28 of subdivision (k) of Sections 17053.98 and 23698.
29 (4) Obtain, when possible, the following information from 30 applicants that do not receive an allocation of credit:
31 (A) Whether the qualified motion picture that was the subject 32 of the application was completed.
33 (B) If completed, in which state or foreign jurisdiction was the 34 primary principal photography completed.
35 (C) Whether the applicant received any financial incentives 36 from the state or foreign jurisdiction to make the qualified motion 37 picture in that location.
38 (5) Provide the Legislative Analyst’s Office, upon request, any 39 or all application materials or any other materials received from, 40 or submitted by, applicants for which a credit allocation decision

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1 has been made, including, but not limited to, applicants that did 2 not receive a credit allocation. Materials provided to the Legislative 3 Analyst’s Office shall be in electronic format when available and 4 include, but not be limited to, information provided pursuant to 5 subclauses (I) to (III), inclusive, of clause (ii) of subparagraph (D) 6 of paragraph (3).
7 (6) The information provided to the California Film Commission 8 pursuant to this section shall constitute confidential tax information 9 for purposes of Article 2 (commencing with Section 19542) of 10 Chapter 7 of Part 10.2.
11 (7) (A) Notwithstanding any other law, on or after July 1, 2030, 12 the California Film Commission may allocate, pursuant to this 13 section, any previously allocated credits not certified that have not 14 previously been added to credit amounts available for allocation 15 under this section or a successor section or sections. 16 (B) For purposes of this section, “previously allocated credits 17 not certified” means either of the following:
18 (i) Credits allocated under paragraph (1) for which the qualified 19 taxpayer to which the credit amounts were originally allocated has 20 notified the California Film Commission in writing that the 21 qualified taxpayer will not request certification for the allocated 22 credits.
23 (ii) The difference between the amount of credits allocated under 24 paragraph (1) to a qualified taxpayer and the amount of credits the 25 California Film Commission certified, for that qualified taxpayer. 26 For purposes of calculating the difference, the California Film 27 Commission shall not consider any credit amounts for which the 28 qualified taxpayer notifies the California Film Commission under 29 clause (i).
30 (8) Notwithstanding any other law, on or after July 1, 2030, the 31 California Film Commission may allocate, pursuant to this section, 32 any credit amounts described in subparagraphs (B) and (E) of 33 paragraph (1) of subdivision (i) that have not previously been 34 added to credit amounts available for allocation under this section 35 or a successor section or sections.
36 (9) The California Film Commission shall submit a report to 37 the Legislature, on an annual basis beginning June 30, 2027, 38 containing diversity data provided by the applicants. The report 39 shall contain, in the aggregate and per project, an assessment of 40 whether the diversity workplan goals required by this section were

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1 met for qualified motion pictures that submitted the final 2 assessment to the California Film Commission in the prior fiscal 3 year. The assessment shall contain an account of diversity 4 workplans submitted, interim assessments submitted, and final 5 assessments submitted, as well as which categories of the diversity 6 workplan checklist established pursuant to paragraph (5) of 7 subdivision (b) were included. In the event that a report is required 8 pursuant to paragraph (9) of subdivision (g) of Section 17053.98 9 and Section 23698 in the same year as a report is required under 10 this paragraph, the reports may be combined into one report. The 11 California Film Commission shall submit each such assessment 12 to the Legislature in compliance with section 9795 of the 13 Government Code.
14 (10) (A) The California Film Commission shall expand the 15 number of nonprofit organizations that partner with the Career 16 Pathways program to build upon their ongoing efforts to provide 17 access to the widest cross section of Californians, including 18 historically disadvantaged and underrepresented individuals 19 seeking training and employment opportunities in motion picture 20 and television production.
21 (B) (i) The California Film Commission shall establish an 22 application process for career-based nonprofit organizations to 23 obtain approval as a Career Pathways program.
24 (ii) The application shall be submitted to the California Film 25 Commission’s fiscal agent during a request for proposal process 26 initiated by the fiscal agent.
27 (iii) The first request for proposal process shall be initiated by 28 the California Film Commission or its fiscal agent prior to the 29 first allocation of credits allowed under this section. 30 (iv) The second request for proposal process shall be initiated 31 by the California Film Commission or its fiscal agent as needed 32 in response to changes in program revenue or training partners, 33 but no later than July 1, 2027.
34 (v) Subsequent request for proposal processes shall be initiated 35 by the California Film Commission or its fiscal agent as the 36 commission deems necessary.
37 (C) The California Film Commission shall approve Career 38 Pathways programs. Career Pathways programs shall meet all of 39 the following requirements:

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1 (i) Be conducted by a nonprofit organization that has an 2 established record of training and job placement in the 3 entertainment industry.
4 (ii) Be focused on training individuals 18 years or older from 5 traditionally underserved communities.
6 (iii) Offer training courses focused on one or more of the 7 following:
8 (I) Skilled, technical positions that would be eligible for qualified 9 wages if performed on a qualified motion picture.
10 (II) Administrative- and industry-related technical occupations. 11 (III) Soft skills training for the motion picture industry. 12 (iv) Meet minimum qualifications and standards for high-quality, 13 skill-based training programs, as determined by the California 14 Film Commission through regulations and in consultation with 15 stakeholders.
16 (D) To ensure the Career Pathways program is successful and 17 has a meaningful impact, the California Film Commission and its 18 fiscal agent shall, in addition to the requirements specified in 19 subparagraph (C), consider the following aspects when evaluating 20 applications:
21 (i) Availability of participants.
22 (ii) Fiscal agent administrative resources.
23 (iii) Overlap with the focus areas of currently approved 24 organizations, including, but not limited to, industry role focus 25 and student outreach focus.
26 (iv) Specific industry labor needs, as determined by the fiscal 27 agent and based on information provided by industry and labor 28 stakeholders.
29 (E) Before July 1, 2026, the California Film Commission shall 30 develop criteria to incentivize supplemental placement of 1 to 4 31 trainees from the Career Pathways Program per qualified 32 production. The placement of the trainees shall not displace 33 otherwise anticipated or necessary hiring of experienced 34 employees. Trainee wages shall be excluded from a production’s 35 qualified wages for purposes of the jobs ratio and incentive 36 calculation.
37 (10)
38 (11) Beginning January 1, 2025, the California Film Commission 39 shall collect information to the extent available and based on data 40 provided by the Career Pathways Training program, about the

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1 breakdown of spending by the Career Pathways Program, how 2 participation in the Career Pathways Program by both program 3 partners and participants has changed in comparison to prior years, 4 whether graduates of the program are accessing jobs in the film 5 industry upon completion of the program, what projects the 6 students have worked on, whether those projects received a tax 7 credit, whether students are employed in California or another 8 state, and the aggregated self-reported and voluntarily provided 9 ethnic, racial, gender, and disability status of such individuals. The 10 California Film Commission shall report to the Legislature, in 11 compliance with Section 9795 of the Government Code, and 12 publish on its internet website an annual report about the Career 13 Pathways Training program, with the above information. Such 14 information shall be reported for participants for five years 15 following a participant’s completion of the Career Pathways 16 Training program, to the extent the information is available. This 17 paragraph shall be applicable consistent with federal and state law. 18 (h) (1) The California Film Commission shall annually provide 19 the Legislative Analyst’s Office, the Franchise Tax Board, and the 20 California Department of Tax and Fee Administration with a list 21 of qualified taxpayers and the tax credit amounts allocated to each 22 qualified taxpayer by the California Film Commission. The list 23 shall include the names and taxpayer identification numbers, 24 including taxpayer identification numbers of each partner or 25 shareholder, as applicable, of the qualified taxpayer. 26 (2) (A) Notwithstanding paragraph (6) of subdivision (g), the 27 California Film Commission shall annually post on its internet 28 website and make available for public release all of the following:
29 (i) A table which includes all of the following information: a 30 list of qualified taxpayers and the tax credit amounts allocated to 31 each qualified taxpayer by the California Film Commission, the 32 number of production days in California the qualified taxpayer 33 represented in its application would occur, the number of California 34 jobs that the qualified taxpayer represented in its application would 35 be directly created by the production, and the total amount of 36 qualified expenditures expected to be spent by the production. 37 (ii) A narrative staff summary describing the production of the 38 qualified taxpayer as well as background information regarding 39 the qualified taxpayer contained in the qualified taxpayer’s 40 application for the credit.

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1 (iii) The diversity report submitted annually to the Legislature 2 described in paragraph (2) of subdivision (g) organized per 3 production and an aggregate compilation describing the voluntary 4 programs collected pursuant to clause (xiii) of subparagraph (A) 5 of paragraph (2) of subdivision (g).
6 (B) Nothing in this subdivision shall be construed to make the 7 information submitted by an applicant for a tax credit under this 8 section a public record, including for the purposes of the California 9 Public Records Act (Division 10 (commencing with Section 10 7920.000) of Title 1 of the Government Code).
11 (3) The California Film Commission shall provide each city 12 and county in California with an instructional guide that includes, 13 but is not limited to, a review of best practices for facilitating 14 motion picture production in local jurisdictions, resources on 15 hosting and encouraging motion picture production, and the 16 California Film Commission’s Model Filming Ordinance. The 17 California Film Commission shall maintain on its internet website 18 a list of initiatives by locality that encourage motion picture 19 production in regions across the state. The list shall be distributed 20 to each approved applicant for the program to highlight local 21 jurisdictions that offer incentives to facilitate film production. 22 (i) (1) (A) The aggregate amount of credits that may be 23 allocated for a fiscal year pursuant to this section and Section 24 23698.1, except as provided in subdivision (k) of Section 17053.98 25 and subdivision (k) of Section 23698, is three hundred thirty 26 million dollars ($330,000,000), plus any amount described in 27 subparagraph (B), (C), (D), or (E) in credits for the 2025–26 fiscal 28 year and each fiscal year thereafter, through and including the 29 2029–30 fiscal year, except as provided in paragraph (7) of 30 subdivision (g).
31 (B) (i) Subject to clauses (ii) and (iii), the unused allocation 32 credit amount, if any, for the preceding fiscal year. 33 (ii) The amount of unused credit allocation attributable to 34 independent films shall only be allocated according to clause (i) 35 of subparagraph (A) of paragraph (2).
36 (iii) The total amount of any unused credit allocation amount 37 that is remaining shall only be allocated pursuant to clause (iv) of 38 subparagraph (A) of paragraph (2).
39 (C) The amount of previously allocated credits not certified.

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1 (D) The amount of any credits reduced pursuant to paragraph 2 (2) of subdivision (d).
3 (E) That portion of any unused allocation credit amount, if any, 4 attributable to Section 17053.85, 17053.95, 17053.98, 23685, 5 23695, or 23698 available for that fiscal year in a manner as 6 determined by regulations promulgated by the California Film 7 Commission.
8 (2) (A) Notwithstanding the foregoing, and subject to paragraph 9 (4) of this subdivision and changes in allocations pursuant to clause 10 (v) of subparagraph (D) of paragraph (2) of subdivision (g), the 11 California Film Commission shall allocate the credit amounts 12 subject to the following categories, but shall have discretion to 13 reallocate up to 10 30 percent of the funds within any category 14 amongst the remaining categories to maximize the amount of total 15 credits allocated:
16 (i) Independent films with qualified expenditures of ten million 17 dollars ($10,000,000) or less shall be allocated 5 percent of the 18 amount specified in paragraph (1). Independent films with qualified 19 expenditures in excess of ten million dollars ($10,000,000) shall 20 be allocated 5 percent of the amount specified in paragraph (1). 21 These amounts shall be in addition to any unused allocation credit 22 amount, if any, for the preceding fiscal year as described in 23 subparagraph (B) of paragraph (1).
24 (ii) Features and animated films shall be allocated 35 percent 25 of the amount specified in paragraph (1).
26 (iii) A relocating television series shall be allocated 15 percent 27 of the amount specified in paragraph (1).
28 (iv) A television series described in clause (ii), (v), (vi), or (viii) 29 of subparagraph (A) of paragraph (19) of subdivision (b) and 30 recurring television series shall be allocated 40 percent of the 31 amount specified in paragraph (1), plus any unused allocation 32 credit amount, if any, for the preceding fiscal year as described in 33 subparagraph (B) of paragraph (1).
34 (B) Within any allocation period for credits to a relocating 35 television series, any unused amount shall be reallocated to the 36 category described in clause (iv) of subparagraph (A) and, if any 37 unused amount remains, reallocated in the next allocation period 38 for credits to a relocating television series.
39 (C) With respect to a relocating television series issued a credit 40 in a subsequent year pursuant to clause (v) of subparagraph (D)

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1 of paragraph (2) of subdivision (g), that subsequent credit amount 2 shall be allowed from the allocation amount described in clause 3 (iv) of subparagraph (A).
4 (3) Any act that reduces the amount that may be allocated 5 pursuant to paragraph (1) constitutes a change in state taxes for 6 the purpose of increasing revenues within the meaning of Section 7 3 of Article XIII A of the California Constitution and may be passed 8 by not less than two-thirds of all Members elected to each of the 9 two houses of the Legislature.
10 (4) A qualified motion picture, as defined in subdivision (k) of 11 Sections 17053.98 and 23698, shall not be eligible for an allocation 12 under subdivisions (a) to (j), inclusive, if it receives a credit under 13 subdivision (k) of Section 17053.98 or Section 23698 during that 14 fiscal year.
15 (j) The California Film Commission shall have the authority to 16 allocate tax credits in accordance with this section and in 17 accordance with any regulations prescribed pursuant to subdivision 18 (e) upon adoption.
19 (k) (1) A qualified taxpayer may make a one-time election to 20 be paid a refund for each taxable year of the refundable period, 21 not to exceed the annual refundable amount.
22 (2) For purposes of this subdivision, the following definitions 23 shall apply:
24 (A) “Annual refundable amount” means 20 percent of the total 25 refundable amount.
26 (B) (i) “Credit amount” means the credit amount specified in 27 the credit certificate issued to the qualified taxpayer by the 28 California Film Commission pursuant to subdivision (g). 29 (ii) In the case of a pass-thru entity, the “credit amount” 30 described in paragraphs (2) and (3) means the pro rata share or 31 distributive share of the credit passed through to the partner or 32 shareholder of the qualified taxpayer. For purposes of this 33 subclause, the term “pass-thru entity” means any partnership, “S” 34 corporation, or limited liability company treated as a partnership. 35 (iii) In the case of an assigned credit, the “credit amount” means 36 the credit amount that was assigned to the taxpayer. 37 (C) “Refundable period” means the first taxable year that the 38 credit certificate is issued to the qualified taxpayer by the California 39 Film Commission pursuant to subdivision (g), and the succeeding 40 four taxable years.

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1 (D) “Total refundable amount” means 100 percent of the credit 2 amount that exceeds the “net tax” in the first taxable year of the 3 refundable period.
4 (3) The refund shall be computed as follows:
5 (A) (i) In the first taxable year of the refundable period, the 6 credit amount shall be allowed against the “net tax” computed 7 under this part for the taxable year.
8 (ii) If the credit allowed by this section exceeds the “net tax” 9 in the first taxable year of the refundable period, the annual 10 refundable amount shall be refunded to the qualified taxpayer. 11 (B) (i) In each taxable year after the first taxable year of the 12 refundable period, the annual refundable amount shall be allowed 13 as a credit against the “net tax” computed under this part for the 14 taxable year, and the excess, if any, shall be refunded to the 15 qualified taxpayer.
16 (ii) If the qualified taxpayer’s tax liability for the taxable year 17 exceeds the annual refundable amount, only the annual refundable 18 amount shall be allowed as a credit against the qualified taxpayer’s 19 “net tax.”
20 (4) (A) In the first taxable year of the refundable period, the 21 total refundable amount, less the annual refundable amount, shall 22 be carried over to the succeeding taxable year.
23 (B) In each taxable year other than first taxable year of 24 refundable period, the total refundable amount, less the annual 25 refundable amount allowed against the qualified taxpayer’s “net 26 tax” or refunded in the current and prior taxable years in the 27 refundable period, shall be carried over to the next succeeding year 28 of the refundable period.
29 (C) Notwithstanding paragraph (3) of subdivision (c), if an 30 election is made pursuant to this subdivision, no amount of credit 31 shall be allowed after the refundable period.
32 (5) Any refund pursuant to this subdivision shall be credited 33 against other amounts due, if any, and the balance, if any, shall be 34 paid from the Tax Relief and Refund Account and refunded to the 35 qualified taxpayer upon their election.
36 (6) An election made pursuant to this subdivision shall be 37 irrevocable and shall be made on an original, timely filed return 38 required under Part 10.2 (commencing with Section 18401) for 39 the taxable year that the credit certificate is issued in the form and 40 manner as prescribed by the Franchise Tax Board.

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1 (7) A taxpayer that purchases a credit pursuant to subdivision 2 (c) cannot elect to be paid a refund pursuant to this subdivision. 3 ( l) For the purposes of complying with Section 41 with respect 4 to this section and Section 23698.1 the Legislature finds and 5 declares all of the following:
6 (1) The specific goals, purposes, and objectives that the credits 7 allowed by this section and Section 23698.1 will achieve include 8 all of the following:
9 (A) To maintain and expand motion picture and television 10 productions, and the quality of the jobs they provide, in California. 11 (B) To keep California’s Film Tax Credit competitive with 12 production incentives offered by other states and other countries. 13 (C) To increase the competitiveness of the tax credits allowed 14 by this section and Section 23698.1 relative to previous California 15 motion picture tax credit programs authorized by Sections 16 17053.85, 17053.95, 17053.98, 23685, 23695, and 23698 by 17 allowing the tax credit to be refundable.
18 (2) The performance indicators for the Legislature to use in 19 determining if the credits accomplish the specific goals, purposes, 20 and objectives may include, but are not limited to, all of the 21 following:
22 (A) The number and types of productions that apply for the tax 23 credits allowed by this section and Section 23698.1. 24 (B) The total amount of credit allocations applied for under this 25 section and Section 23698.1.
26 (C) The total amount of credits allocated under this section and 27 Section 23698.1.
28 (D) The total amount of credits certified as eligible to be claimed 29 on a tax return under this section and Section 23698.1. 30 (E) The number of jobs included in the budgets of productions 31 receiving the tax credits allocated by this section and Section 32 23698.1.
33 (F) The number of productions relocating from another state or 34 country to California and receive the tax credits allocated by this 35 section and Section 23698.1.
36 (G) A comparison of the performance indicators specified in 37 paragraphs (1) to (6), inclusive, with results from California motion 38 picture tax credit programs authorized by Sections 17053.85, 39 17053.95, 17053.98, 23685, 23695, and 23698.

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1 (H) The total amount of credits allocated by this section and 2 Section 23698.1 that are claimed as a refund on a tax return. 3 (3) On or before May 1, 2028, the Legislative Analyst’s Office 4 shall provide to the Assembly Committee on Revenue and 5 Taxation, the Senate Committee on Governance and Finance, and 6 the public a report evaluating the effectiveness of the tax credits 7 allowed by this section and Section 23698.1 in achieving the 8 metrics outlined in subdivision (a), including an assessment of the 9 refundability of the tax credit in achieving those metrics. In 10 researching the reports, the Legislative Analyst’s Office may do 11 all of the following:
12 (A) Request and receive all information of California Film 13 Commission applicants for which a credit allocation decision has 14 been made, including, but not limited to, applicants that did not 15 receive a credit allocation, provided to the California Film 16 Commission pursuant to subdivision (g) of this section and Sections 17 17053.95, 17053.98, 23695, 23698, and 23698.1.
18 (B) Request and receive all information provided to the 19 Franchise Tax Board relating to the sale or assignment of credits 20 pursuant to subdivision (c) of this section and Sections 17053.95, 21 17053.98, 23695, 23698, and 23698.1.
22 (C) Request and receive all information provided to the 23 California Department of Tax and Fee Administration pursuant to 24 subdivisions (c) and (g) of Section 6902.5.
25 (4) Notwithstanding Section 19542, the California Film 26 Commission, the California Department of Tax and Fee 27 Administration, the Franchise Tax Board, the Employment 28 Development Department, and all other relevant state agencies 29 shall provide additional information, as requested by the Legislative 30 Analyst’s Office, as necessary to research the report required by 31 this subdivision.
32 (5) (A) The information received by the Legislative Analyst’s 33 Office pursuant to this section shall be considered confidential 34 taxpayer information subject to Sections 7056, 7056.5, and 19542 35 of this code and Section 1094 of the Unemployment Insurance 36 Code, and shall be subject to the appropriate confidentiality 37 requirements of the participating state agency.
38 (B) The Legislative Analyst’s Office may publish statistics in 39 conjunction with the reports required by this section that are 40 derived from information provided to the Legislative Analyst’s

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1 Office pursuant to this section, if the published statistics are 2 classified to prevent the identification of particular taxpayers, 3 reports, and tax returns and the publication of the percentage of 4 dividends paid by a corporation that is deductible by the recipient 5 under Part 11 (commencing with Section 23001) of Division 2. 6 SEC. 3. Section 23698 of the Revenue and Taxation Code is 7 amended to read:
8 23698. (a) (1) For taxable years beginning on or after January 9 1, 2020, there shall be allowed to a qualified taxpayer a credit 10 against the “tax,” as defined in Section 23036, subject to a 11 computation and ranking by the California Film Commission in 12 subdivision (g) and the allocation amount categories described in 13 subdivision (i), in an amount equal to 20 percent or 25 percent, 14 whichever is the applicable credit percentage described in 15 paragraph (4), of the qualified expenditures for the production of 16 a qualified motion picture in California. A credit shall not be 17 allowed under this section for any qualified expenditures for the 18 production of a motion picture in California if a credit has been 19 claimed for those same expenditures under Section 23685 or 23695. 20 (2) Except as otherwise provided in this section, the credit shall 21 be allowed for the taxable year in which the California Film 22 Commission issues the credit certificate pursuant to subdivision 23 (g) for the qualified motion picture, but in no instance prior to July 24 1, 2020, and shall be for the applicable percentage of all qualified 25 expenditures paid or incurred by the qualified taxpayer in all 26 taxable years for that qualified motion picture.
27 (3) (A) The amount of the credit allowed to a qualified taxpayer 28 shall be limited to the amount specified in the credit certificate 29 issued to the qualified taxpayer by the California Film Commission 30 pursuant to subdivision (g).
31 (B) In determining the amount specified in the credit certificate 32 in subparagraph (A), the California Film Commission shall be 33 limited to the following amounts of qualified expenditures for each 34 qualified motion picture:
35 (i) (I) In the case of a feature, up to one hundred million dollars 36 ($100,000,000).
37 (II) Notwithstanding subclause (I), for taxable years beginning 38 on or after January 1, 2025, and only for purposes of the credit 39 allowed in subdivision (k), in the case of a feature, up to one 40 hundred twenty million dollars ($120,000,000).

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1 (ii) (I) In the case of a miniseries described in clause (ii) of 2 subparagraph (A) of paragraph (18) of subdivision (b), up to one 3 hundred million dollars ($100,000,000).
4 (II) Notwithstanding subclause (I), for taxable years beginning 5 on or after January 1, 2025, and only for purposes of the credit 6 allowed in subdivision (k), in the case of a miniseries described 7 in clause (ii) of subparagraph (A) of paragraph (18) of subdivision 8 (b), up to one hundred twenty million dollars ($120,000,000). 9 (iii) (I) In the case of a television series described in clause 10 (iii) or clause (v) of subparagraph (A) of paragraph (18) of 11 subdivision (b), up to one hundred million dollars ($100,000,000) 12 per season.
13 (II) Notwithstanding subclause (I), for taxable years beginning 14 on or after January 1, 2025, and only for purposes of the credit 15 allowed in subdivision (k), in the case of a television series 16 described in clause (iii) or clause (v) of subparagraph (A) of 17 paragraph (18) of subdivision (b), up to one hundred twenty million 18 dollars ($120,000,000).
19 (iv) In the case of an independent film, up to ten million dollars 20 ($10,000,000).
21 (4) For purposes of paragraphs (1) and (2), the applicable credit 22 percentage shall be:
23 (A) Twenty percent of the qualified expenditures attributable 24 to the production of a qualified motion picture in California, 25 including, but not limited to, a feature or a television series that 26 relocated to California that is in its second or subsequent years of 27 receiving a tax credit allocation pursuant to this section, Section 28 23685, or Section 23695.
29 (B) Twenty-five percent of the qualified expenditures 30 attributable to the production of a qualified motion picture in 31 California where the qualified motion picture is a television series 32 that relocated to California in its first year of receiving a tax credit 33 allocation pursuant to this section.
34 (C) Twenty-five percent of the qualified expenditures 35 attributable to the production of a qualified motion picture that is 36 an independent film.
37 (D) Additional credits shall be allowed for the production of a 38 qualified motion picture whose applicable credit percentage is 39 determined pursuant to subparagraph (A), in an aggregate amount

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1 not to exceed 5 percent of the qualified expenditures under that 2 subparagraph, as follows:
3 (i) (I) Five percent of qualified expenditures, excluding qualified 4 wages described in subparagraph (E), relating to original 5 photography outside the Los Angeles zone.
6 (II) For purposes of this clause and subparagraph (E):
7 (ia) “Applicable period” means the period that commences with 8 preproduction and ends when original photography concludes. The 9 applicable period includes the time necessary to strike a remote 10 location and return to the Los Angeles zone.
11 (ib) “Los Angeles zone” means the area within a circle 30 miles 12 in radius from Beverly Boulevard and La Cienega Boulevard, Los 13 Angeles, California, and includes Agua Dulce, Castaic, including 14 Castaic Lake, Leo Carrillo State Beach, Ontario International 15 Airport, Piru, and Pomona, including the Los Angeles County 16 Fairgrounds. The Metro-Goldwyn-Mayer, Inc. Conejo Ranch 17 property is within the Los Angeles zone.
18 (ic) “Original photography” includes principal photography and 19 reshooting original footage.
20 (id) “Qualified expenditures relating to original photography 21 outside the Los Angeles zone” means amounts paid or incurred 22 during the applicable period for tangible personal property 23 purchased or leased and used or consumed outside the Los Angeles 24 zone and relating to original photography outside the Los Angeles 25 zone and qualified wages paid for services performed outside the 26 Los Angeles zone and relating to original photography outside the 27 Los Angeles zone.
28 (ii) Five percent of the qualified expenditures relating to 29 qualified visual effects attributable to the production of a qualified 30 motion picture in California.
31 (E) (i) Notwithstanding subparagraph (D), an amount equal to 32 10 percent of qualified wages paid for services performed relating 33 to original photography outside of the Los Angeles zone to 34 qualified individuals who reside in California but outside the Los 35 Angeles zone shall be allowed as an additional credit for the 36 production of a qualified motion picture whose applicable credit 37 percentage is determined pursuant to subparagraph (A). 38 (ii) Notwithstanding subparagraph (D), an amount equal to 5 39 percent of qualified wages paid for services performed relating to 40 original photography outside of the Los Angeles zone to qualified

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1 individuals who reside in California but outside the Los Angeles 2 zone shall be allowed as an additional credit for the production of 3 a qualified motion picture whose applicable credit percentage is 4 determined pursuant to subparagraph (B) or (C).
5 (b) For purposes of this section:
6 (1) “Ancillary product” means any article for sale to the public 7 that contains a portion of, or any element of, the qualified motion 8 picture.
9 (2) “Budget” means an estimate of all expenses paid or incurred 10 during the production period of a qualified motion picture. It shall 11 be the same budget used by the qualified taxpayer and production 12 company for all qualified motion picture purposes.
13 (3) “Clip use” means a use of any portion of a motion picture, 14 other than the qualified motion picture, used in the qualified motion 15 picture.
16 (4) “Credit certificate” means the certificate issued by the 17 California Film Commission pursuant to subparagraph (D) of 18 paragraph (3) of subdivision (g).
19 (5) (A) “Employee fringe benefits” means the amount allowable 20 as a deduction under this part to the qualified taxpayer involved 21 in the production of the qualified motion picture, exclusive of any 22 amounts contributed by employees, for any year during the 23 production period with respect to any of the following:
24 (i) Employer contributions under any pension, profit-sharing, 25 annuity, or similar plan.
26 (ii) Employer-provided coverage under any accident or health 27 plan for employees.
28 (iii) The employer’s cost of life or disability insurance provided 29 to employees.
30 (B) Any amount treated as wages under clause (i) of 31 subparagraph (A) of paragraph (21) shall not be taken into account 32 under this paragraph.
33 (6) (A) “Independent film” means a motion picture with a 34 minimum budget of one million dollars ($1,000,000) that is 35 produced by a company that is not publicly traded and publicly 36 traded companies do not own, directly or indirectly, more than 25 37 percent of the producing company.
38 (B) Notwithstanding subparagraph (A), for taxable years 39 beginning on or after January 1, 2025, and only for purposes of 40 the credit allowed in subdivision (k), a motion picture with a

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1 minimum budget of one million dollars ($1,000,000) that is 2 produced by a company that is not publicly traded and publicly 3 traded companies do not own, directly or indirectly, more than 30 4 percent of the producing company.
5 (7) “Jobs ratio” means the amount of qualified wages paid to 6 qualified individuals divided by the amount of tax credit, not 7 including any additional credit allowed pursuant to subparagraphs 8 (D) and (E) of paragraph (4) of subdivision (a), as computed by 9 the California Film Commission. For the purposes of the 10 calculation of the jobs ratio only, 70 percent of qualified 11 expenditures for visual effects paid to third-party vendors for work 12 performed in California shall be deemed to be qualified wages 13 paid to a qualified individual.
14 (8) “Licensing” means any grant of rights to distribute the 15 qualified motion picture, in whole or in part.
16 (9) “New use” means any use of a motion picture in a medium 17 other than the medium for which it was initially created. 18 (10) “Pilot for a new television series” means the initial episode 19 produced for a proposed television series.
20 (11) (A) “Postproduction” means the final activities in a 21 qualified motion picture’s production, including editing, foley 22 recording, automatic dialogue replacement, sound editing, scoring, 23 music track recording by musicians and music editing, beginning 24 and end credits, negative cutting, negative processing and 25 duplication, the addition of sound and visual effects, sound mixing, 26 film-to-tape transfers, encoding, and color correction. 27 (B) “Postproduction” does not include the manufacture or 28 shipping of release prints or their equivalent.
29 (12) “Preproduction” means the process of preparation for actual 30 physical production which begins after a qualified motion picture 31 has received a firm agreement of financial commitment, or is 32 greenlit, with, for example, the establishment of a dedicated 33 production office, the hiring of key crew members, and includes, 34 but is not limited to, activities that include location scouting and 35 execution of contracts with vendors of equipment and stage space. 36 (13) “Principal photography” means the phase of production 37 during which the motion picture is actually shot, as distinguished 38 from preproduction and postproduction.
39 (14) “Production period” means the period beginning with 40 preproduction and ending upon completion of postproduction.

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1 (15) “Qualified entity” means a personal service corporation as 2 defined in Section 269A(b)(1) of the Internal Revenue Code, a 3 payroll services corporation, or any entity receiving qualified wages 4 with respect to services performed by a qualified individual. 5 (16) “Qualified expenditures” means amounts paid or incurred 6 for tangible personal property purchased or leased, and used, within 7 this state in the production of a qualified motion picture and 8 payments, including qualified wages, for services performed within 9 this state in the production of a qualified motion picture. 10 (17) (A) “Qualified individual” means any individual who 11 performs services during the production period in an activity related 12 to the production of a qualified motion picture.
13 (B) “Qualified individual” shall not include either of the 14 following:
15 (i) Any individual related to the qualified taxpayer as described 16 in subparagraph (A), (B), or (C) of Section 51(i)(1) of the Internal 17 Revenue Code.
18 (ii) Any 5-percent owner, as defined in Section 416(i)(1)(B) of 19 the Internal Revenue Code, of the qualified taxpayer. 20 (18) (A) “Qualified motion picture” means a motion picture 21 that is produced for distribution to the general public, regardless 22 of medium, that is one of the following:
23 (i) A feature with a minimum production budget of one million 24 dollars ($1,000,000).
25 (ii) A miniseries consisting of two or more episodes, each longer 26 than 40 minutes of running time, exclusive of commercials, that 27 is produced in California, with a minimum production budget of 28 one million dollars ($1,000,000) per episode.
29 (iii) A new television series of episodes longer than 40 minutes 30 each of running time, exclusive of commercials, that is produced 31 in California, with a minimum production budget of one million 32 dollars ($1,000,000) per episode.
33 (iv) An independent film.
34 (v) A television series that relocated to California. 35 (vi) (I) For taxable years beginning before January 1, 2025, a 36 pilot for a new television series that is longer than 40 minutes of 37 running time, exclusive of commercials, that is produced in 38 California, and with a minimum production budget of one million 39 dollars ($1,000,000). For purposes of the credit allowed in

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1 subdivision (k), this subclause shall only apply for taxable years 2 beginning before January 1, 2025.
3 (vii)
4 (II) For taxable years beginning on or after January 1, 2025, 5 and only for purposes of the credit allowed in subdivision (k), a 6 pilot for a new live action or animated series that is at least 20 7 minutes of running time, exclusive of commercials, and is produced 8 in California with a minimum production budget of one million 9 dollars ($1,000,000) per episode.
10 (viii)
11 (vii) For taxable years beginning on or after January 1, 2025, 12 and only for purposes of the credit allowed in subdivision (k), a 13 live action or animated series, averaging across a season at least 14 20 minutes of running time per episode, exclusive of commercials, 15 that is produced in California, with a minimum production budget 16 of one million dollars ($1,000,000) per episode.
17 (ix)
18 (viii) For taxable years beginning on or after January 1, 2025, 19 and only for purposes of the credit allowed in subdivision (k), an 20 animated film that is produced in California, with a minimum 21 production budget of one million dollars ($1,000,000). 22 (x)
23 (ix) For taxable years beginning on or after January 1, 2025, 24 and only for purposes of the credit allowed in subdivision (k), a 25 large-scale competition show, not including traditional reality, 26 game shows, talk shows, or docufollow television programming, 27 that is produced in California, with a minimum production budget 28 of one million dollars ($1,000,000) per episode.
29 (B) To qualify as a “qualified motion picture,” all of the 30 following conditions shall be satisfied:
31 (i) At least 75 percent of the principal photography days occur 32 wholly in California or 75 percent of the production budget is 33 incurred for payment for services performed within the state and 34 the purchase or rental of property used within the state. 35 (ii) Production of the qualified motion picture is completed 36 within 30 months from the date on which the qualified taxpayer’s 37 application is approved by the California Film Commission. For 38 purposes of this section, a qualified motion picture is “completed” 39 when the process of postproduction has been finished.

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1 (iii) The copyright for the motion picture is registered with the 2 United States Copyright Office pursuant to Title 17 of the United 3 States Code.
4 (iv) Principal photography of the qualified motion picture 5 commences after the date on which the application is approved by 6 the California Film Commission, but no later than 180 days after 7 the date of that approval if the qualified motion picture has a budget 8 with qualified expenditures of less than one hundred million dollars 9 ($100,000,000), and no later than 240 days after the date of that 10 approval in the case of a qualified motion picture with a budget 11 of qualified expenditures with at least one hundred million dollars 12 ($100,000,000), unless death, disability, or disfigurement of the 13 director or of a principal cast member; an act of God, including, 14 but not limited to, fire, flood, earthquake, storm, hurricane, or other 15 natural disaster; terrorist activities; or government sanction has 16 directly prevented a production’s ability to begin principal 17 photography within the prescribed 180- or 240-day commencement 18 period.
19 (C) For the purposes of subparagraph (A), in computing the 20 total wages paid or incurred for the production of a qualified 21 motion picture, all amounts paid or incurred by all persons or 22 entities that share in the costs of the qualified motion picture shall 23 be aggregated.
24 (D) “Qualified motion picture” shall not include commercial 25 advertising, music videos, a motion picture produced for private 26 noncommercial use, such as weddings, graduations, or as part of 27 an educational course and made by students, a news program, 28 current events or public events program, talk show, game show, 29 sporting event or activity, awards show, telethon or other 30 production that solicits funds, reality television program, except 31 as specified in clause (ix) of subparagraph (A), clip-based 32 programming if more than 50 percent of the content is comprised 33 of licensed footage, documentaries, variety programs, daytime 34 dramas, strip shows, one-half hour (air time) episodic television 35 shows, except as specified in clause (vii) of subparagraph (A), or 36 any production that falls within the recordkeeping requirements 37 of Section 2257 of Title 18 of the United States Code. 38 (19) (A) “Qualified taxpayer” means a taxpayer who has paid 39 or incurred qualified expenditures, participated in the Career 40 Readiness requirement in Section 23695 and has been issued a

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1 credit certificate by the California Film Commission pursuant to 2 subdivision (g).
3 (B) (i) In the case of any pass-thru entity, the determination of 4 whether a taxpayer is a qualified taxpayer under this section shall 5 be made at the entity level and any credit under this section is not 6 allowed to the pass-thru entity but shall be passed through to the 7 partners or shareholders in accordance with applicable provisions 8 of Part 10 (commencing with Section 17001) or Part 11 9 (commencing with Section 23001). For purposes of this paragraph, 10 “pass-thru entity” means any entity taxed as a partnership or “S” 11 corporation.
12 (ii) In the case of an “S” corporation, the credit allowed under 13 this section shall not be used by an “S” corporation as a credit 14 against a tax imposed under Chapter 4.5 (commencing with Section 15 23800) of Part 11 of Division 2.
16 (20) “Qualified visual effects” means visual effects where at 17 least 75 percent or a minimum of ten million dollars ($10,000,000) 18 of the qualified expenditures for the visual effects are paid or 19 incurred in California.
20 (21) (A) “Qualified wages” means all of the following:
21 (i) Any wages subject to withholding under Division 6 22 (commencing with Section 13000) of the Unemployment Insurance 23 Code that were paid or incurred by any taxpayer involved in the 24 production of a qualified motion picture with respect to a qualified 25 individual for services performed on the qualified motion picture 26 production within this state.
27 (ii) The portion of any employee fringe benefits paid or incurred 28 by any taxpayer involved in the production of the qualified motion 29 picture that are properly allocable to qualified wage amounts 30 described in clauses (i), (iii), and (iv).
31 (iii) Any payments made to a qualified entity for services 32 performed in this state by qualified individuals within the meaning 33 of paragraph (17).
34 (iv) Remuneration paid to an independent contractor who is a 35 qualified individual for services performed within this state by that 36 qualified individual.
37 (B) “Qualified wages” shall not include any of the following:
38 (i) Expenses, including wages, related to new use, reuse, clip 39 use, licensing, secondary markets, or residual compensation, or

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1 the creation of any ancillary product, including, but not limited to, 2 a soundtrack album, toy, game, trailer, or teaser.
3 (ii) Expenses, including wages, paid or incurred with respect to 4 acquisition, development, turnaround, or any rights thereto. 5 (iii) Expenses, including wages, related to financing, overhead, 6 marketing, promotion, or distribution of a qualified motion picture. 7 (iv) Expenses, including wages, paid per person per qualified 8 motion picture for writers, directors, music directors, music 9 composers, music supervisors, producers, and performers, other 10 than background actors with no scripted lines.
11 (22) “Recurring television series” means any television series 12 that was previously approved and issued a credit allocation letter 13 under this section.
14 (23) “Residual compensation” means supplemental
15 compensation paid at the time that a motion picture is exhibited 16 through new use, reuse, clip use, or in secondary markets, as 17 distinguished from payments made during production.
18 (24) “Reuse” means any use of a qualified motion picture in the 19 same medium for which it was created, following the initial use 20 in that medium.
21 (25) “Secondary markets” means media in which a qualified 22 motion picture is exhibited following the initial media in which it 23 is exhibited.
24 (26) “Television series that relocated to California” means a 25 television series, without regard to episode length or initial media 26 exhibition, with a minimum production budget of one million 27 dollars ($1,000,000) per episode, that filmed at least 75 percent of 28 principal photography days in its most recent season outside of 29 California or has filmed all seasons outside of California and for 30 which the taxpayer certifies that the credit provided pursuant to 31 this section is the primary reason for relocating to California. 32 (27) “Visual effects” means the creation, alteration, or 33 enhancement of images that cannot be captured on a set or location 34 during live action photography and therefore is accomplished in 35 postproduction. It includes, but is not limited to, matte paintings, 36 animation, set extensions, computer-generated objects, characters 37 and environments, compositing (combining two or more elements 38 in a final image), and wire removals. “Visual effects” does not 39 include fully animated projects, whether created by traditional or 40 digital means.

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1 (c) (1) Notwithstanding subdivision (i) of Section 23036, in 2 the case where the credit allowed by this section exceeds the 3 taxpayer’s tax liability computed under this part, a qualified 4 taxpayer may elect to assign any portion of the credit allowed 5 under this section to one or more affiliated corporations for each 6 taxable year in which the credit is allowed. For purposes of this 7 subdivision, “affiliated corporation” has the meaning provided in 8 subdivision (b) of Section 25110 as of the last day of the taxable 9 year in which the credit is allowed, except that “100 percent” is 10 substituted for “more than 50 percent” wherever it appears in the 11 section, and “voting common stock” is substituted for “voting 12 stock” wherever it appears in the section.
13 (2) The election provided in paragraph (1):
14 (A) May be based on any method selected by the qualified 15 taxpayer that originally receives the credit.
16 (B) Shall be irrevocable for the taxable year the credit is allowed, 17 once made.
18 (C) May be changed for any subsequent taxable year if the 19 election to make the assignment is expressly shown on each of the 20 returns of the qualified taxpayer and the qualified taxpayer’s 21 affiliated corporations that assign and receive the credits. 22 (D) Shall be reported to the Franchise Tax Board, in the form 23 and manner specified by the Franchise Tax Board, along with all 24 required information regarding the assignment of the credit, 25 including the corporation number, the federal employer 26 identification number, or other taxpayer identification number of 27 the assignee, and the amount of the credit assigned. 28 (3) (A) Notwithstanding any other law, a qualified taxpayer 29 may sell any credit allowed under this section that is attributable 30 to an independent film, as defined in paragraph (6) of subdivision 31 (b), to an unrelated party.
32 (B) The qualified taxpayer shall report to the Franchise Tax 33 Board prior to the sale of the credit, in the form and manner 34 specified by the Franchise Tax Board, all required information 35 regarding the purchase and sale of the credit, including the social 36 security or other taxpayer identification number of the unrelated 37 party to whom the credit has been sold, the face amount of the 38 credit sold, and the amount of consideration received by the 39 qualified taxpayer for the sale of the credit.

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1 (4) In the case where the credit allowed under this section 2 exceeds the “tax,” the excess credit may be carried over to reduce 3 the “tax” in the following taxable year, and succeeding eight 4 taxable years, if necessary, until the credit has been exhausted. 5 (5) A credit shall not be sold pursuant to this subdivision to 6 more than one taxpayer, nor may the credit be resold by the 7 unrelated party to another taxpayer or other party.
8 (6) A party that has been assigned or acquired tax credits under 9 this subdivision shall be subject to the requirements of this section. 10 (7) In no event may a qualified taxpayer assign or sell any tax 11 credit to the extent the tax credit allowed by this section is claimed 12 on any tax return of the qualified taxpayer.
13 (8) In the event that both the taxpayer originally allocated a 14 credit under this section by the California Film Commission and 15 a taxpayer to whom the credit has been sold both claim the same 16 amount of credit on their tax returns, the Franchise Tax Board may 17 disallow the credit of either taxpayer, so long as the statute of 18 limitations upon assessment remains open.
19 (9) Chapter 3.5 (commencing with Section 11340) of Part 1 of 20 Division 3 of Title 2 of the Government Code does not apply to 21 any standard, criterion, procedure, determination, rule, notice, or 22 guideline established or issued by the Franchise Tax Board 23 pursuant to this subdivision.
24 (10) Subdivision (i) of Section 23036 shall not apply to any 25 credit sold pursuant to this subdivision.
26 (11) For purposes of this subdivision:
27 (A) An affiliated corporation or corporations that are assigned 28 a credit pursuant to paragraph (1) shall be treated as a qualified 29 taxpayer pursuant to paragraph (1) of subdivision (a). 30 (B) The unrelated party or parties that purchase a credit pursuant 31 to paragraphs (3) to (10), inclusive, shall be treated as a qualified 32 taxpayer pursuant to paragraph (1) of subdivision (a). 33 (d) (1) No credit shall be allowed pursuant to this section unless 34 the qualified taxpayer provides the following to the California 35 Film Commission:
36 (A) Identification of each qualified individual.
37 (B) The specific start and end dates of production. 38 (C) The total wages paid.
39 (D) The total amount of qualified wages paid to qualified 40 individuals.

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1 (E) Aggregate data for individuals whose wages are excluded 2 from qualified wages by clause (iv) of subparagraph (B) of 3 paragraph (21) of subdivision (b), including their gender, ethnic, 4 and racial makeup.
5 (F) The copyright registration number, as reflected on the 6 certificate of registration issued under the authority of Section 410 7 of Title 17 of the United States Code, relating to registration of 8 claim and issuance of certificate. The registration number shall be 9 provided on the return claiming the credit.
10 (G) The total amounts paid or incurred to purchase or lease 11 tangible personal property used in the production of a qualified 12 motion picture.
13 (H) Information to substantiate its qualified expenditures. 14 (I) Information required by the California Film Commission 15 under regulations promulgated pursuant to subdivision (g) 16 necessary to verify the amount of credit claimed.
17 (J) Data regarding the diversity of the workforce employed by 18 the applicant on the qualified motion picture, as described in 19 subdivision (g).
20 (K) Documentation verifying completion of the Career 21 Readiness requirement.
22 (L) Documentation verifying that the qualified taxpayer paid a 23 fee as described in subdivision (e).
24 (2) (A) Based on the information provided in paragraph (1), 25 the California Film Commission shall recompute the jobs ratio 26 previously computed in subdivision (g) and compare this 27 recomputed jobs ratio to the jobs ratio that the qualified taxpayer 28 previously listed on the application submitted pursuant to 29 subdivision (g).
30 (B) (i) If the California Film Commission determines that the 31 jobs ratio has been reduced by more than 10 percent for a qualified 32 motion picture, the California Film Commission shall reduce the 33 amount of credit allowed by an equal percentage, unless the 34 qualified taxpayer demonstrates, and the California Film 35 Commission determines, that reasonable cause exists for the jobs 36 ratio reduction.
37 (ii) If the California Film Commission determines that the jobs 38 ratio has been reduced by more than 20 percent for a qualified 39 motion picture, the California Film Commission shall not accept 40 an application described in subdivision (g) from that qualified

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1 taxpayer or any member of the qualified taxpayer’s controlled 2 group for a period of not less than one year from the date of that 3 determination, unless the qualified taxpayer demonstrates, and the 4 California Film Commission determines, that reasonable cause 5 exists for the jobs ratio reduction.
6 (C) For the purposes of this paragraph, “reasonable cause” 7 means unforeseen circumstances beyond the control of the qualified 8 taxpayer, such as, but not limited to, the cancellation of a television 9 series prior to the completion of the scheduled number of episodes 10 or other similar circumstances as determined by the California 11 Film Commission in regulations to be adopted pursuant to 12 subdivision (e).
13 (e) (1) (A) Subject to the Administrative Procedure Act 14 (Chapter 3.5 (commencing with Section 11340) of Part 1 of 15 Division 3 of Title 2 of the Government Code), the California Film 16 Commission shall adopt rules and regulations to implement a pilot 17 Career Pathways Training program including a fee to be paid by 18 the qualified taxpayer, if the qualified taxpayer receives a credit 19 under this section, to fund technical skills training to individuals 20 from underserved communities for entry into film and television 21 industry jobs. The California Film Commission shall (i) identify 22 a not-for-profit fiscal agent with direct relationships to industry 23 skills training programs to manage the funds; and (ii) engage 24 labor-management jointly administered training programs with 25 skills training focused on the entertainment industry to implement 26 the program with California Film Commission approval and 27 oversight. With regard to the Career Readiness requirement in 28 Section 23695, the California Film Commission shall identify 29 training and public service opportunities that may include, but not 30 be limited to, hiring interns, public service announcements, and 31 community outreach shall continue. The California Film 32 Commission may prescribe rules and regulations to carry out the 33 purposes of this section, including, subparagraph (D) of paragraph 34 (4) of subdivision (a) and clause (iv) of subparagraph (D) of 35 paragraph (2) of subdivision (g), and including any rules and 36 regulations necessary to establish procedures, processes, 37 requirements, application fee structure, and rules identified in or 38 required to implement this section, including credit and logo 39 requirements and credit allocation procedures over multiple fiscal

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1 years where the qualified taxpayer is producing a series of features 2 that will be filmed concurrently.
3 (B) Notwithstanding any other law, prior to preparing a notice 4 of proposed action pursuant to Section 11346.4 of the Government 5 Code and prior to making any revision to the proposed regulation 6 other than a change that is nonsubstantial or solely grammatical 7 in nature, the Governor’s Office of Business and Economic 8 Development shall first approve the proposed regulation or 9 proposed change to a proposed regulation regarding allocating the 10 credit pursuant to subdivision (i), computing the jobs ratio as 11 described in subdivisions (d) and (g), and defining “reasonable 12 cause” pursuant to subparagraph (C) of paragraph (2) of subdivision 13 (d).
14 (2) (A) Implementation of this section for the 2020–21 fiscal 15 year is deemed an emergency and necessary for the immediate 16 preservation of the public peace, health, and safety, or general 17 welfare and, therefore, the California Film Commission is hereby 18 authorized to adopt emergency regulations to implement this 19 section during the 2020–21 fiscal year in accordance with the 20 rulemaking provisions of the Administrative Procedure Act 21 (Chapter 3.5 (commencing with Section 11340) of Part 1 of 22 Division 3 of Title 2 of the Government Code).
23 (B) Nothing in this paragraph shall be construed to require the 24 Governor’s Office of Business and Economic Development to 25 approve emergency regulations adopted pursuant to this paragraph. 26 (3) The California Film Commission shall not be required to 27 prepare an economic impact analysis pursuant to the Administrative 28 Procedure Act (Chapter 3.5 (commencing with Section 11340) of 29 Part 1 of Division 3 of Title 2 of the Government Code) with regard 30 to any rules and regulations adopted pursuant to this subdivision. 31 (f) If the qualified taxpayer fails to provide the copyright 32 registration number as required in subparagraph (E) of paragraph 33 (1) of subdivision (d), the credit shall be disallowed and assessed 34 and collected under Section 19051 until the procedures are 35 satisfied.
36 (g) For purposes of this section, the California Film Commission 37 shall do the following:
38 (1) Subject to the requirements of subparagraphs (A) to (E), 39 inclusive, of paragraph (2), on or after July 1, 2020, and before

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1 July 1, 2025, in two or more allocation periods per fiscal year, 2 allocate tax credits to applicants.
3 (2) (A) Establish a procedure for applicants to file with the 4 California Film Commission a written application, on a form jointly 5 prescribed by the California Film Commission and the Franchise 6 Tax Board for the allocation of the tax credit. The application shall 7 include, but not be limited to, the following information:
8 (i) The budget for the motion picture production.
9 (ii) The number of production days.
10 (iii) A financing plan for the production.
11 (iv) The diversity of the workforce employed by the applicant, 12 including, but not limited to, the ethnic and racial makeup of the 13 individuals employed by the applicant during the production of 14 the qualified motion picture, to the extent possible. 15 (v) All members of a combined reporting group, if known at 16 the time of the application.
17 (vi) The amount of qualified wages the applicant expects to pay 18 to qualified individuals.
19 (vii) The amount of tax credit the applicant computes the 20 qualified motion picture will receive, applying the applicable credit 21 percentages described in paragraph (4) of subdivision (a). 22 (viii) A statement establishing that the tax credit described in 23 this section is a significant factor in the applicant’s choice of 24 location for the qualified motion picture. The statement shall 25 include information about whether the qualified motion picture is 26 at risk of not being filmed or specify the jurisdiction or jurisdictions 27 in which the qualified motion picture will be located in the absence 28 of the tax credit. The statement shall be signed by an officer or 29 executive of the applicant.
30 (ix) The applicant’s written policy against unlawful harassment, 31 including, but not limited to, sexual harassment, which includes 32 procedures for reporting and investigating harassment claims, a 33 phone number for an individual who will be responsible for 34 receiving harassment claims, and a statement that the company 35 will not retaliate against an individual who reports harassment. 36 The applicant shall also indicate how the policy will be distributed 37 to employees and include a summary of education training 38 resources, including the prohibition against, and prevention and 39 correction of, sexual harassment and remedies available.

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1 (x) The ethnic and racial makeup and gender of individuals 2 whose wages are excluded from qualified wages as set forth in 3 clause (iv) of subparagraph (B) of paragraph (21) of subdivision 4 (b).
5 (xi) A summary of the applicant’s voluntary programs to 6 increase the representation of minorities and women in the job 7 classifications that are not included in qualified wages as set forth 8 in clause (iv) of subparagraph (B) of paragraph (21) of subdivision 9 (b) and information about how these programs are publicized to 10 interested parties. The officer or executive referenced in clause 11 (x) who is signing the statement shall provide additional 12 information about these programs, if needed and upon request, to 13 the California Film Commission.
14 (xii) Any other information deemed relevant by the California 15 Film Commission or the Franchise Tax Board.
16 (B) Establish criteria, consistent with the requirements of this 17 section, for allocating tax credits.
18 (C) Determine and designate applicants who meet the 19 requirements of this section.
20 (D) (i) For purposes of allocating the credit amounts subject to 21 the categories described in subdivision (i) in any fiscal year, the 22 California Film Commission shall do all of the following:
23 (ii) For each allocation date and for each category, list each 24 applicant from highest to lowest according to the jobs ratio as 25 computed by the California Film Commission.
26 (iii) Subject to the applicable credit percentage, allocate the 27 credit to each applicant according to the highest jobs ratio, working 28 down the list, until the credit amount is exhausted. 29 (iv) (I) Pursuant to regulations adopted pursuant to subdivision 30 (e), the California Film Commission may increase the jobs ratio 31 by up to 25 percent if a qualified motion picture increases economic 32 activity in California according to criteria developed by the 33 California Film Commission that would include, but not be limited 34 to, such factors as, the amount of the production and postproduction 35 spending in California, the utilization of scoring musicians in 36 California, and other criteria measuring economic impact in 37 California as determined by the California Film Commission. 38 (II) For qualified motion pictures that are described in 39 subparagraph (D) of paragraph (8) of subdivision (k), the jobs ratio

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1 shall be equal to the product of the jobs ratio calculated in 2 paragraph (7) of subdivision (b) and 133 percent.
3 (v) Notwithstanding any other law, any television series, 4 relocating television series, or any new television series based on 5 a pilot for a new television series that has been approved and issued 6 a credit allocation by the California Film Commission under this 7 section, including subdivision (k), Section 17053.98, including 8 subdivision (k), or Section 17053.85, 17053.95, 23685, or 23695 9 shall be issued a credit for each subsequent season, for the life of 10 that television series whenever credits are allocated within a fiscal 11 year. For taxable years beginning before January 1, 2025, the 12 California Film Commission shall limit the amount of credits any 13 recurring television series receives in a subsequent season to no 14 more than the amount reserved in its prior fiscal year Credit 15 Allocation Letter or Letters, or if no amounts were reserved in the 16 prior fiscal year, the most immediate prior fiscal year in which a 17 Credit Allocation Letter or Letters were received. For taxable years 18 beginning on or after January 1, 2025, the California Film 19 Commission shall limit the amount of credits any recurring 20 television series receives in a subsequent season to no more than 21 the recurring television allocation amount, as defined in paragraph 22 (23) of subdivision (b) of Section 23698.1. In the event that 23 insufficient tax credits are available to fund all recurring television 24 series pursuant to this clause for any fiscal year or in the event the 25 California Film Commission projects, in collaboration with the 26 Department of Finance, that there will be insufficient tax credits 27 available to fund all recurring television series in either of the 28 subsequent two fiscal years, the California Film Commission shall 29 make the following adjustments in the order given until the 30 shortfall, or any projected shortfall for the two subsequent fiscal 31 years, for recurring television series is eliminated:
32 (I) Notwithstanding clause (iii) of subparagraph (A) of paragraph 33 (2) of subdivision (i), the California Film Commission may redirect 34 up to 100 percent of the credit amounts allocated to the relocating 35 television series category to recurring television series for that 36 fiscal year until the shortfall or projected shortfall is eliminated. 37 (II) Notwithstanding clause (iv) of subparagraph (A) of 38 paragraph (2) of subdivision (i), the California Film Commission 39 may redirect up to 100 percent of the credit amounts allocated to

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1 a new television series to recurring television series for that fiscal 2 year until the shortfall or projected shortfall is eliminated. 3 (III) Notwithstanding clause (ii) of subparagraph (A) of 4 paragraph (2) of subdivision (i), the California Film Commission 5 may redirect up to 100 percent of the credit allocations from the 6 features category to the recurring television series category for 7 that fiscal year until the shortfall is eliminated.
8 (IV) Allocate up to 25 percent of total credit allocations that 9 would otherwise be allocated in the 2024–25 fiscal year to recurring 10 television series in the current fiscal year until the shortfall is 11 eliminated. Any amounts transferred for allocation in the current 12 fiscal year shall be subtracted from the amount allowed to be 13 allocated in the 2024–25 fiscal year as specified in subdivision (i). 14 Notwithstanding paragraph (3), the credit allocations that are 15 subtracted from 2024–25 shall not be certified until July 1, 2025, 16 or later.
17 (V) The California Film Commission shall consult with the 18 qualified taxpayers who are producing the recurring television 19 series for purposes of negotiating a minimally impactful reduction 20 in the amount of credits awarded to each recurring television series 21 for that fiscal year until the shortfall is eliminated. 22 (E) Subject to the annual cap and the allocation credit amounts 23 based on categories described in subdivision (i), allocate an 24 aggregate amount of credits under this section and Section 25 17053.98, and allocate any carryover of unallocated or unused 26 credits from prior years and Sections 17053.85, 17053.95, 23685, 27 and 23695, and the amount of any credits reduced pursuant to 28 paragraph (2) of subdivision (d).
29 (3) Certify tax credits allocated to qualified taxpayers. 30 (A) Establish a verification procedure to update the information 31 in subparagraph (A) of paragraph (2) of subdivision (g), including, 32 but not limited to, all of the following:
33 (i) The amounts of qualified expenditures paid or incurred by 34 the applicant.
35 (ii) The diversity of the workforce employed by the applicant. 36 (iii) The ethnic and racial makeup and gender of individuals 37 whose wages are excluded from qualified wages by clause (iv) of 38 subparagraph (B) of paragraph (21) of subdivision (b). 39 (B) Establish audit requirements that shall be satisfied before a 40 credit certificate may be issued by the California Film Commission.

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1 (C) (i) Establish a procedure for a qualified taxpayer to report 2 to the California Film Commission, prior to the issuance of a credit 3 certificate, the following information:
4 (I) If readily available, a list of the states, provinces, or other 5 jurisdictions in which any member of the applicant’s combined 6 reporting group in the same business unit as the qualified taxpayer 7 that, in the preceding calendar year, has produced a qualified 8 motion picture intended for release in the United States market. 9 For purposes of this clause, “qualified motion picture” shall not 10 include any episodes of a television series that were complete or 11 in production prior to July 1, 2020.
12 (II) Whether a qualified motion picture described in subclause 13 (I) was awarded any financial incentive by the state, province, or 14 other jurisdiction that was predicated on the performance of 15 primary principal photography or postproduction in that location. 16 (ii) The California Film Commission may provide that the report 17 required by this subparagraph be filed in a single report provided 18 on a calendar year basis for those qualified taxpayers that receive 19 multiple credit certificates in a calendar year.
20 (D) Issue a credit certificate to a qualified taxpayer upon 21 completion of the qualified motion picture reflecting the credit 22 amount allocated after qualified expenditures have been verified 23 and the jobs ratio computed under this section. The amount of 24 credit shown on the credit certificate shall not exceed the amount 25 of credit allocated to that qualified taxpayer pursuant to this section. 26 (4) Obtain, when possible, the following information from 27 applicants that do not receive an allocation of credit:
28 (A) Whether the qualified motion picture that was the subject 29 of the application was completed.
30 (B) If completed, in which state or foreign jurisdiction was the 31 primary principal photography completed.
32 (C) Whether the applicant received any financial incentives 33 from the state or foreign jurisdiction to make the qualified motion 34 picture in that location.
35 (5) Provide the Legislative Analyst’s Office, upon request, any 36 or all application materials or any other materials received from, 37 or submitted by, applicants for which a credit allocation decision 38 has been made, including, but not limited to, applicants that did 39 not receive a credit allocation. Materials provided to the Legislative 40 Analyst’s Office shall be in electronic format when available and

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1 include, but not be limited to, information provided pursuant to 2 clauses (i) to (xii), inclusive, of subparagraph (A) of paragraph (2) 3 and the diversity workplans provided pursuant to clause (iv) of 4 subparagraph (B) of paragraph (2) of subdivision (k). 5 (6) The information provided to the California Film Commission 6 pursuant to this section shall constitute confidential tax information 7 for purposes of Article 2 (commencing with Section 19542) of 8 Chapter 7 of Part 10.2.
9 (7) (A) Notwithstanding any other law, on or after July 1, 2025, 10 the California Film Commission may allocate, pursuant to this 11 section, any previously allocated credits not certified that have not 12 previously been added to credit amounts available for allocation 13 under this section or a successor section or sections. 14 (B) For purposes of this section, “previously allocated credits 15 not certified” means either:
16 (i) Credits allocated under paragraph (1) for which the qualified 17 taxpayer to which the credit amounts were originally allocated has 18 notified the California Film Commission in writing that the 19 qualified taxpayer will not request certification for the allocated 20 credits.
21 (ii) The difference between the amount of credits allocated under 22 paragraph (1) to a qualified taxpayer and the amount of credits the 23 California Film Commission certified, for that qualified taxpayer. 24 For purposes of calculating the difference, the California Film 25 Commission shall not consider any credit amounts for which the 26 qualified taxpayer notifies the California Film Commission under 27 clause (i).
28 (8) Notwithstanding any other law, on or after July 1, 2025, the 29 California Film Commission may allocate, pursuant to this section, 30 any credit amounts described in subparagraphs (B) and (E) of 31 paragraph (1) of subdivision (i) that have not previously been 32 added to credit amounts available for allocation under this section 33 or a successor section or sections.
34 (9) The California Film Commission shall submit a report to 35 the Legislature, on an annual basis beginning January 1, 2022, on 36 aggregate diversity information for the productions allocated tax 37 credits allowed in this section and the diversity of the motion 38 picture production industry in California more generally. 39 (h) (1) The California Film Commission shall annually provide 40 the Legislative Analyst’s Office, the Franchise Tax Board, and the

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1 California Department of Tax and Fee Administration with a list 2 of qualified taxpayers and the tax credit amounts allocated to each 3 qualified taxpayer by the California Film Commission. The list 4 shall include the names and taxpayer identification numbers, 5 including taxpayer identification numbers of each partner or 6 shareholder, as applicable, of the qualified taxpayer. 7 (2) (A) Notwithstanding paragraph (6) of subdivision (g), the 8 California Film Commission shall annually post on its internet 9 website and make available for public release the following:
10 (i) A table which includes all of the following information: a 11 list of qualified taxpayers and the tax credit amounts allocated to 12 each qualified taxpayer by the California Film Commission, the 13 number of production days in California the qualified taxpayer 14 represented in its application would occur, the number of California 15 jobs that the qualified taxpayer represented in its application would 16 be directly created by the production, and the total amount of 17 qualified expenditures expected to be spent by the production. 18 (ii) A narrative staff summary describing the production of the 19 qualified taxpayer as well as background information regarding 20 the qualified taxpayer contained in the qualified taxpayer’s 21 application for the credit.
22 (iii) For qualified taxpayers allocated a credit, the aggregate 23 diversity information collected pursuant to clauses (iv) and (xii) 24 of subparagraph (A) of paragraph (2) of subdivision (g) organized 25 per production and an aggregate compilation describing the 26 voluntary programs collected pursuant to clause (xiii) of 27 subparagraph (A) of paragraph (2) of subdivision (g). 28 (B) Nothing in this subdivision shall be construed to make the 29 information submitted by an applicant for a tax credit under this 30 section a public record, including for the purposes of the California 31 Public Records Act (Division 10 (commencing with Section 32 7920.000) of Title 1 of the Government Code).
33 (3) The California Film Commission shall provide each city 34 and county in California with an instructional guide that includes, 35 but is not limited to, a review of best practices for facilitating 36 motion picture production in local jurisdictions, resources on 37 hosting and encouraging motion picture production, and the 38 California Film Commission’s Model Filming Ordinance. The 39 California Film Commission shall maintain on its internet website 40 a list of initiatives by locality that encourage motion picture

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1 production in regions across the state. The list shall be distributed 2 to each approved applicant for the program to highlight local 3 jurisdictions that offer incentives to facilitate film production. 4 (i) (1) (A) The aggregate amount of credits that may be 5 allocated for a fiscal year pursuant to this section and Section 6 17053.98, except as provided in subdivision (k) of this section and 7 subdivision (k) of Section 17053.98, is three hundred thirty million 8 dollars ($330,000,000), plus any amount described in subparagraph 9 (B), (C), (D), or (E) in credits for the 2020–21 fiscal year and each 10 fiscal year thereafter, through and including the 2024–25 fiscal 11 year, except as provided in paragraph (7) of subdivision (g), plus 12 the amount described in subparagraph (F) in credits for the 2021–22 13 and 2022–23 fiscal years.
14 (B) (i) Subject to clauses (ii) and (iii), the unused allocation 15 credit amount, if any, for the preceding fiscal year. 16 (ii) The amount of unused credit allocation attributable to 17 independent films shall only be allocated according to clause (i) 18 of subparagraph (A) of paragraph (2).
19 (iii) The total amount of any unused credit allocation amount 20 that is remaining shall only be allocated pursuant to clause (iv) of 21 subparagraph (A) of paragraph (2).
22 (C) The amount of previously allocated credits not certified. 23 (D) The amount of any credits reduced pursuant to paragraph 24 (2) of subdivision (d).
25 (E) That portion of any unused allocation credit amount, if any, 26 attributable to Section 17053.85, 17053.95, 23685, or 23695 27 available for that fiscal year in a manner as determined by 28 regulations promulgated by the California Film Commission. 29 (F) (i) For fiscal years 2021–22 and 2022–23, the California 30 Film Commission shall allocate an additional fifteen million dollars 31 ($15,000,000) in credits to be granted exclusively to television 32 series that relocate to California.
33 (I) Notwithstanding subparagraph (A) of paragraph (2) of this 34 subdivision and clause (v) of subparagraph (D) of paragraph (2) 35 of subdivision (g), the moneys allocated pursuant to this 36 subparagraph shall not be redirected or reallocated. 37 (II) Notwithstanding paragraph (25) of subdivision (b), for 38 purposes of this subparagraph, a “television series that relocated 39 to California” means a television series, without regard to episode 40 length or initial media exhibition, with a minimum production

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1 budget of one million dollars ($1,000,000) per episode that both 2 filmed at least 75 percent of principal photography days for at least 3 one episode outside of California and has not filmed more than 25 4 percent of principal photography days for any episode inside of 5 California.
6 (ii) For fiscal years 2021–22 and 2022–23, the California Film 7 Commission shall allocate an additional seventy-five million 8 dollars ($75,000,000) in credits to be granted exclusively to 9 recurring television series.
10 (2) (A) Notwithstanding the foregoing, and subject to paragraph 11 (4) of this subdivision and changes in allocations pursuant to clause 12 (v) of subparagraph (D) of paragraph (2) of subdivision (g), the 13 California Film Commission shall allocate the credit amounts 14 subject to the following categories:
15 (i) Independent films with qualified expenditures of ten million 16 dollars ($10,000,000) or less shall be allocated 4.8 percent of the 17 amount specified in paragraph (1). Independent films with qualified 18 expenditures in excess of ten million dollars ($10,000,000) shall 19 be allocated 3.2 percent of the amount specified in paragraph (1). 20 These amounts shall be in addition to any unused allocation credit 21 amount, if any, for the preceding fiscal year as described in 22 subparagraph (B) of paragraph (1).
23 (ii) Features shall be allocated 35 percent of the amount specified 24 in paragraph (1).
25 (iii) A relocating television series shall be allocated 17 percent 26 of the amount specified in paragraph (1).
27 (iv) A new television series, pilots for a new television series, 28 miniseries, and recurring television series shall be allocated 40 29 percent of the amount specified in paragraph (1), plus any unused 30 allocation credit amount, if any, for the preceding fiscal year as 31 described in subparagraph (B) of paragraph (1).
32 (B) Within any allocation period for credits to a relocating 33 television series, any unused amount shall be reallocated to the 34 category described in clause (iv) of subparagraph (A) and, if any 35 unused amount remains, reallocated in the next allocation period 36 for credits to a relocating television series.
37 (C) With respect to a relocating television series issued a credit 38 in a subsequent year pursuant to clause (v) of subparagraph (D) 39 of paragraph (2) of subdivision (g), that subsequent credit amount

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1 shall be allowed from the allocation amount described in clause 2 (iv) of subparagraph (A).
3 (3) Any act that reduces the amount that may be allocated 4 pursuant to paragraph (1) constitutes a change in state taxes for 5 the purpose of increasing revenues within the meaning of Section 6 3 of Article XIII A of the California Constitution and may be passed 7 by not less than two-thirds of all Members elected to each of the 8 two houses of the Legislature.
9 (4) A qualified motion picture, as defined in subdivision (k), 10 shall not be eligible for an allocation under subdivisions (a) to (j), 11 inclusive, if it receives a credit under subdivision (k) during that 12 fiscal year.
13 (j) The California Film Commission shall have the authority to 14 allocate tax credits in accordance with this section and in 15 accordance with any regulations prescribed pursuant to subdivision 16 (e) upon adoption.
17 (k) (1) For taxable years beginning on or after January 1, 2022, 18 and before January 1, 2032, there shall be allowed to a qualified 19 taxpayer a credit against the “tax,” as defined in Section 23036, 20 subject to allocation by the California Film Commission, in an 21 amount equal to:
22 (A) For credits allocated before July 1, 2025, 20 percent or 25 23 percent, whichever is the applicable credit percentage described 24 in paragraph (4) of subdivision (a), as modified by paragraph (3) 25 of this subdivision, of the qualified expenditures for the production 26 of a qualified motion picture produced in the state at a certified 27 studio construction project.
28 (B) For credits allocated on or after July 1, 2025, 35 percent or 29 40 percent, whichever is the applicable credit percentage described 30 in paragraph (4) of subdivision (a) of Section 23698.1, as modified 31 by paragraph (3) of this subdivision, of the qualified expenditures 32 for the production of a qualified motion picture produced in the 33 state at a certified studio construction project.
34 (2) For purposes of this subdivision, the definitions in 35 subdivision (b) shall apply except as otherwise provided in this 36 subdivision.
37 (A) “Certified studio construction project” means a construction 38 or renovation project certified for a period of five years by the 39 California Film Commission as having met all of the following 40 criteria:

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1 (i) The project provides for the construction or renovation of 2 one or more soundstages located in the state.
3 (ii) Actual construction or renovation expenditures are not less 4 than twenty-five million dollars ($25,000,000) of actual 5 construction or renovation expenditures made over not more than 6 five continuous calendar years.
7 (iii) The construction or renovation of each certified studio 8 construction project is performed in accordance with Section 9 17053.99.
10 (iv) The construction or renovation of each certified studio 11 construction project commences pursuant to a foundation permit 12 or a structural building permit for the construction or renovation 13 that is issued after the effective date of the act adopting this 14 subdivision.
15 (v) The certified studio construction project applicant or its 16 affiliates shall not have received a California Competes Grant 17 under Section 12096.6 of the Government Code for wages or 18 investment related to construction of the studio construction 19 project.
20 (B) “Qualified motion picture” means a qualified motion picture, 21 as defined in subdivision (b), that meets all of the following 22 requirements:
23 (i) During the production period, the qualified motion picture 24 films at least 50 percent of its principal photography stage shooting 25 days on a soundstage or soundstages certified as a certified studio 26 construction project.
27 (ii) During the production period, the qualified motion picture 28 pays or incurs at least five million dollars ($5,000,000) in qualified 29 wages for filming on a soundstage or soundstages certified as a 30 certified studio construction project.
31 (iii) For taxable years beginning before January 1, 2025, is 32 produced by a qualified taxpayer that is either of the following:
33 (I) More than 50 percent owned, directly or indirectly, by the 34 same owner or owners of the soundstage or soundstages that is 35 part of a certified studio construction project on which the 36 production is filmed.
37 (II) Entered into a contract or lease of 10 years or more with 38 the owner or owners of a certified studio construction project on 39 which the production is filmed.

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1 (iv) Provides a diversity workplan that is approved by the 2 California Film Commission.
3 (C) For purposes of this subdivision, a qualified taxpayer and 4 a taxpayer include a passthrough entity and a disregarded entity. 5 (3) (A) The diversity workplan required pursuant to clause (iv) 6 of subparagraph (B) of paragraph (2) shall include all of the 7 following:
8 (i) A statement of the diversity goals the motion picture will 9 seek to achieve in terms of qualified wages paid by race, ethnicity, 10 gender, and disability status.
11 (ii) A statement of the diversity goals the motion picture will 12 seek to achieve for individuals whose wages are excluded from 13 qualified wages as set forth in clause (iv) of subparagraph (B) of 14 paragraph (21) of subdivision (b), with respect to both 15 compensation and to the representation of diversity in the creative 16 aspects of the motion picture.
17 (iii) A plan of what strategies the motion picture will employ 18 to achieve the goals in clauses (i) and (ii).
19 (B) The diversity workplan shall include goals that are broadly 20 reflective of California’s population, in terms of race, ethnicity, 21 gender, and disability status.
22 (C) The California Film Commission shall approve or reject the 23 diversity workplan of an applicant, to the extent allowed by federal 24 and state law.
25 (D) (i) The California Film Commission shall not certify any 26 tax credit under this subdivision until they have received a final 27 diversity report from the qualified motion picture applicant. 28 (ii) The final diversity report shall calculate and provide 29 evidence for the extent to which the applicant met the diversity 30 goals laid out in their diversity workplan.
31 (iii) The California Film Commission shall have the authority 32 to audit the final diversity report to determine if the diversity goals 33 set forth in the applicant’s diversity workplan for the motion picture 34 production were achieved.
35 (iv) If the California Film Commission determines that the 36 qualified motion picture applicant has met or made a good faith 37 effort to meet the diversity goals in its diversity workplan, the 38 applicant’s credit percentage described in paragraph (1) shall be 39 increased by up to four percentage points as follows:

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1 (I) By two percentage points if the California Film Commission 2 determines that the applicant has met or made a good faith effort 3 to meet the diversity goals with respect to the diversity of the 4 workforce employed by the applicant in its diversity workplan 5 statement.
6 (II) By two percentage points if the California Film Commission 7 determines that the applicant has met or made a good faith effort 8 to meet the diversity goals with respect to individuals whose wages 9 are excluded from qualified wages as set forth in clause (iv) of 10 subparagraph (B) of paragraph (21) of subdivision (b), in its 11 diversity workplan statement.
12 (E) The California Film Commission, in consultation with the 13 Governor’s Office of Business and Economic Development, shall 14 establish guidelines to evaluate diversity workplans as described 15 in this paragraph. The guidelines shall be posted on the California 16 Film Commission’s internet website.
17 (4) The credit allowed under this subdivision shall be 18 administered in accordance with subdivisions (a), (b), (c), (d), (h), 19 and (l), except that paragraph (1) of subdivision (a) shall not apply, 20 paragraph (7) of subdivision (b) shall not apply, and paragraph (2) 21 of subdivision (d) shall not apply.
22 (5) Subparagraph (A) of paragraph (2), subparagraphs (A), (B), 23 and (C) of paragraph (3), and paragraphs (4), (5), and (6) of 24 subdivision (g) shall apply.
25 (6) A conflict between this subdivision and any other 26 subdivisions in this section shall be reconciled in favor of this 27 subdivision.
28 (7) The aggregate amount of credit allocated by the California 29 Film Commission pursuant to subdivisions (a) to (j), inclusive, of 30 this section and Section 17053.98 shall not be reduced by the tax 31 credit allowed pursuant to this subdivision. The amount of credit 32 allowed by this subdivision shall not be limited by subdivision (i). 33 (8) (A) The credit allocated pursuant to this subdivision shall 34 be allowed for the taxable year in which the California Film 35 Commission issues a credit certificate in accordance with the 36 procedures provided for in subdivision (g) for the qualified motion 37 picture. The California Film Commission shall issue a credit 38 certificate to a qualified taxpayer upon completion of the qualified 39 motion picture reflecting the credit amount allocated after qualified 40 expenditures have been verified.

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1 (B) The California Film Commission, commencing with fiscal 2 year 2021–22, shall allocate tax credits each year to qualified 3 motion pictures meeting the criteria of this subdivision. The total 4 amount of credits that may be allocated under this subdivision is 5 one hundred fifty million dollars ($150,000,000). For taxable years 6 beginning before January 1, 2025, the amount of credit that may 7 be allocated to a qualified motion picture under this subdivision 8 shall not exceed the greater of twelve million dollars ($12,000,000), 9 or seven hundred fifty thousand dollars ($750,000) per episode, 10 for a season of a television series. For taxable years beginning on 11 or after January 1, 2025, the amount of credit that may be allocated 12 to a qualified motion picture under this subdivision shall not exceed 13 the greater of twenty-one million dollars ($21,000,000) or one 14 million three hundred thousand dollars ($1,300,000) per episode, 15 for a season of a television series. Recurring television series 16 receiving an initial allocation under this subdivision shall be 17 allocated for subsequent seasons no more than allowed under this 18 paragraph.
19 (C) In any year the tax credits under this paragraph have been 20 allocated by the California Film Commission, a qualified motion 21 picture or a recurring television series that satisfies the criteria of 22 this subdivision, but have not received an allocation of credits, 23 may apply to receive an allocation of credits pursuant to 24 subdivision (i).
25 (D) A qualified motion picture that satisfies the criteria of this 26 subdivision, other than a recurring television series described in 27 subparagraph (E) of this paragraph, that does not receive a credit 28 allocation under this subdivision because the total amount of credits 29 authorized for the program in subparagraph (B) has been allocated 30 or the qualified motion picture commenced production during the 31 sixth year the certified studio construction project has been certified 32 by the California Film Commission, or any year thereafter, may 33 apply for a credit allocation under subdivisions (a) through (j), 34 inclusive, subject to the jobs ratio enhancement in subclause (II) 35 of clause (iv) of subparagraph (D) of paragraph (2) of subdivision 36 (g).
37 (E) A recurring television series that satisfies the criteria of this 38 subdivision and that is no longer eligible for a credit allocation 39 under this subdivision for a reason described in subparagraph (D) 40 shall receive a credit allocation under subdivisions (a) through (j),

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1 inclusive, pursuant to clause (v) of subparagraph (D) of paragraph 2 (2) of subdivision (g).
3 (F) Credits shall be allocated based on the assumption that the 4 motion picture meets the diversity criteria specified in clause (iv) 5 of subparagraph (D) of paragraph (3).
6 (G) If any successor tax credit program that modifies or replaces 7 the program specified in subdivisions (a) through (j), inclusive, of 8 this section or Section 17053.98 is enacted, both of the following 9 shall apply:
10 (i) A qualified motion picture described in subparagraph (D) 11 may apply to receive an allocation of credits under the successor 12 program.
13 (ii) A recurring television series described in subparagraph (E) 14 shall receive an allocation of credits under the successor program. 15 (9) A qualified motion picture meeting the requirements of this 16 subdivision that receives a credit allocation during the five-year 17 period the certified studio construction project is certified by the 18 California Film Commission shall be allowed a credit under this 19 subdivision for subsequent seasons for the life of that recurring 20 television series as long as the qualified motion picture continues 21 to satisfy the criteria of this subdivision and to the extent the total 22 credit amount the California Film Commission is permitted to 23 allocate pursuant to subparagraph (B) of paragraph (8) has not 24 previously been allocated.
25 (10) Within six months of the effective date of this subdivision, 26 the California Film Commission shall:
27 (A) Establish procedures to certify a certified studio construction 28 project.
29 (B) Establish procedures to verify a qualified motion picture 30 has met the criteria established in this section for filming in a 31 certified studio construction project facility. That procedure shall 32 include a requirement that the qualified motion picture pay 0.5 33 percent of the approved credit amount to the Career Pathways 34 Training program specified in subdivision (e).
35 (C) (i) Implementation of this subdivision for the 2023–24 36 fiscal year is deemed an emergency and necessary for the 37 immediate preservation of the public peace, health, and safety, or 38 general welfare and, therefore, the California Film Commission 39 is hereby authorized to adopt emergency regulations to implement 40 this subdivision during the 2023–24 fiscal year in accordance with

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1 the rulemaking provisions of the Administrative Procedure Act

2 (Chapter 3.5 (commencing with Section 11340) of Part 1 of 3 Division 3 of Title 2 of the Government Code).
4 (ii) The California Film Commission shall adopt regulations in 5 order to implement this paragraph.
6 (iii) The California Film Commission shall not be required to 7 prepare an economic impact analysis pursuant to the Administrative 8 Procedure Act (Chapter 3.5 (commencing with Section 11340) of 9 Part 1 of Division 3 of Title 2 of the Government Code) with regard 10 to any rules and regulations adopted pursuant to this subdivision. 11 (11) In the case where the credit allowed by this subdivision 12 exceeds the taxpayer’s tax liability computed under this part, the 13 excess credit may be carried over to reduce the “tax” in the 14 following taxable year, and succeeding eight taxable years, if 15 necessary, until the credit has been exhausted.
16 (12) Upon completion of construction or renovation of the 17 soundstage or soundstages, the certified studio construction project 18 applicant shall certify to the California Film Commission that all 19 contractors and subcontractors performing construction work on 20 the soundstage or soundstages were required to use a skilled and 21 trained workforce to perform such work in accordance with 22 subdivision (b) of Section 17053.99.
23 (13) (A) Upon completion of construction or renovation of the 24 soundstage or soundstages, the soundstage or soundstages shall 25 be continuously operated, maintained, and repaired by any of the 26 following:
27 (i) A workforce that is paid at least the general prevailing rate 28 of per diem wages for the type of work and geographic area, as 29 determined by the Director of Industrial Relations pursuant to 30 Sections 1773 and 1773.9 of the Labor Code, if such services are 31 performed by a workforce that is employed directly, or indirectly 32 through a motion picture payroll services company, by the owner 33 or affiliate of the owner of the soundstage or lessee of the 34 soundstage described in subclause (II) of clause (iii) of 35 subparagraph (B) of paragraph (2) of this subdivision. 36 (ii) A skilled and trained workforce as defined in Chapter 2.9 37 (commencing with Section 2600) of Part 1 of Division 2 of the 38 Public Contract Code, if such services are provided by third-party 39 vendors.

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1 (B) Each year following completion of construction or

2 renovation of the soundstage or soundstages that a qualified motion 3 picture is allocated a tax credit pursuant to this subdivision, the 4 certified studio construction project applicant shall certify to the 5 California Film Commission both of the following:
6 (i) The total amount of payments to third-party vendors or 7 qualified wages for operation, maintenance, and repair of the 8 certified soundstage.
9 (ii) The amount and percentage of the total amount of payments 10 to third-party vendors or qualified wages for operation, 11 maintenance, and repair of the certified soundstage performed by 12 each workforce described in subparagraph (A).
13 (C) If the percentage paid to workers in clause (i) of 14 subparagraph (A) is certified to be 90 percent of the total amount 15 under clause (i) of subparagraph (B) or greater, the qualified 16 taxpayer shall be entitled to 100 percent of the applicable credit 17 issued under this subdivision for the period. If the percentage paid 18 to workers in clause (i) of subparagraph (A) is certified to be less 19 than 90 percent of the total amount under clause (i) of subparagraph 20 (B) but greater than or equal to 75 percent of the total amount 21 under clause (i) of subparagraph (B), the qualified taxpayer shall 22 be entitled to 50 percent of the applicable credit issued under this 23 subdivision for the period. If the percentage paid to workers in 24 clause (i) of subparagraph (A) is certified to be less than 75 percent 25 of the total amount under clause (i) of subparagraph (B), the 26 qualified taxpayer shall not be entitled to any credit issued under 27 this subdivision for the applicable period.
28 (14) (A) Except as provided in subparagraph (B), the changes 29 made to this subdivision by the act adding this paragraph shall 30 apply to taxable years beginning on or after January 1, 2023. 31 (B) The changes made to subparagraphs (A) and (B) of 32 paragraph (2) by the act adding this paragraph shall apply for all 33 taxable years to any certified studio construction project that has 34 been certified, and any qualified motion picture that has been 35 allocated a credit, pursuant to this subdivision.
36 ( l) Section 41 shall not apply to the credits allowed by this 37 section.
38 SEC. 4. Section 23698.1 of the Revenue and Taxation Code 39 is amended to read:

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1 23698.1. (a) (1) For taxable years beginning on or after

2 January 1, 2025, there shall be allowed to a qualified taxpayer a 3 credit against the “tax,” as defined in Section 23036, subject to a 4 computation and ranking by the California Film Commission in 5 subdivision (g) and the allocation amount categories described in 6 subdivision (i), in an amount equal to 35 or 40 percent, whichever 7 is the applicable credit percentage described in paragraph (4), of 8 the qualified expenditures for the production of a qualified motion 9 picture in California. A credit shall not be allowed under this 10 section for any qualified expenditures for the production of a 11 motion picture in California if a credit has been claimed for those 12 same expenditures under Section 23685, 23695, or 23698. 13 (2) Except as otherwise provided in this section, the credit shall 14 be allowed for the taxable year in which the California Film 15 Commission issues the credit certificate pursuant to subdivision 16 (g) for the qualified motion picture, but in no instance prior to July 17 1, 2025, and shall be for the applicable percentage of all qualified 18 expenditures paid or incurred by the qualified taxpayer in all 19 taxable years for that qualified motion picture.
20 (3) (A) The amount of the credit allowed to a qualified taxpayer 21 shall be limited to the amount specified in the credit certificate 22 issued to the qualified taxpayer by the California Film Commission 23 pursuant to subdivision (g).
24 (B) In determining the amount specified in the credit certificate 25 in subparagraph (A), the California Film Commission shall be 26 limited to the following amounts of qualified expenditures for each 27 qualified motion picture:
28 (i) In the case of a feature, up to one hundred twenty million 29 dollars ($100,000,000). ($120,000,000).
30 (ii) In the case of a miniseries or limited series described in 31 clause (ii) of subparagraph (A) of paragraph (19) of subdivision 32 (b), up to one hundred twenty million dollars ($100,000,000). 33 ($120,000,000).
34 (iii) In the case of a television series described in clause (iii) or 35 clause (v) of subparagraph (A) of paragraph (19) of subdivision 36 (b), up to one hundred twenty million dollars ($100,000,000) 37 ($120,000,000) per season.
38 (iv) In the case of an independent film, up to twenty million 39 dollars ($20,000,000).

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1 (4) For purposes of paragraphs (1) and (2), the applicable credit

2 percentage shall be as follows:
3 (A) Thirty-five percent of the qualified expenditures attributable 4 to the production of a qualified motion picture in California, 5 including, but not limited to, a feature or a television series that 6 relocated to California that is in its second or subsequent years of 7 receiving a tax credit allocation pursuant to this section, or Section 8 23685, 23695, or 23698.
9 (B) Forty percent of the qualified expenditures attributable to 10 the production of a qualified motion picture in California where 11 the qualified motion picture is a television series that relocated to 12 California in its first year of receiving a tax credit allocation 13 pursuant to this section.
14 (C) Thirty-five percent of the qualified expenditures attributable 15 to the production of a qualified motion picture that is an 16 independent film.
17 (D) Additional credits shall be allowed for the production of a 18 qualified motion picture which applicable credit percentage is 19 determined pursuant to subparagraph (A), in an aggregate amount 20 not to exceed 5 percent of the qualified expenditures under that 21 subparagraph, as follows:
22 (i) (I) Five percent of qualified expenditures, excluding qualified 23 wages described in subparagraph (E), relating to original 24 photography outside the Los Angeles zone.
25 (II) For purposes of this clause and subparagraph (E):
26 (ia) “Applicable period” means the period that commences with 27 preproduction and ends when original photography concludes. The 28 applicable period includes the time necessary to strike a remote 29 location and return to the Los Angeles zone.
30 (ib) “Los Angeles zone” means the area within a circle 30 miles 31 in radius from Beverly Boulevard and La Cienega Boulevard, Los 32 Angeles, California, and includes Agua Dulce, Castaic, including 33 Castaic Lake, Leo Carrillo State Beach, Ontario International 34 Airport, Piru, and Pomona, including the Los Angeles County 35 Fairgrounds. The Metro-Goldwyn-Mayer, Inc. Conejo Ranch 36 property is within the Los Angeles zone.
37 (ic) “Original photography” includes principal photography and 38 reshooting original footage.
39 (id) “Qualified expenditures relating to original photography 40 outside the Los Angeles zone” means amounts paid or incurred

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1 during the applicable period for tangible personal property

2 purchased or leased and used or consumed outside the Los Angeles 3 zone and relating to original photography outside the Los Angeles 4 zone and qualified wages paid for services performed outside the 5 Los Angeles zone and relating to original photography outside the 6 Los Angeles zone.
7 (ii) Five percent of the qualified expenditures relating to 8 qualified visual effects attributable to the production of a qualified 9 motion picture in California.
10 (E) (i) Notwithstanding subparagraph (D), an amount equal to 11 10 percent of qualified wages paid for services performed relating 12 to original photography outside of the Los Angeles zone to 13 qualified individuals who reside in California but outside the Los 14 Angeles zone shall be allowed as an additional credit for the 15 production of a qualified motion picture which applicable credit 16 percentage is determined pursuant to subparagraph (A) or (C). 17 (ii) Notwithstanding subparagraph (D), an amount equal to 5 18 percent of qualified wages paid for services performed relating to 19 original photography outside of the Los Angeles zone to qualified 20 individuals who reside in California but outside the Los Angeles 21 zone shall be allowed as an additional credit for the production of 22 a qualified motion picture which applicable credit percentage is 23 determined pursuant to subparagraph (B).
24 (F) Notwithstanding subparagraph (D), an amount up to 2 25 percent of qualified expenditures, as determined by the California 26 Film Commission, for qualified productions that employ trainees 27 from a Career Pathways Program pursuant to subparagraph (E) 28 of paragraph (10) of subdivision (g).
29 (b) For purposes of this section:
30 (1) “Ancillary product” means any article for sale to the public 31 that contains a portion of, or any element of, the qualified motion 32 picture.
33 (2) “Budget” means an estimate of all expenses paid or incurred 34 during the production period of a qualified motion picture. It shall 35 be the same budget used by the qualified taxpayer and production 36 company for all qualified motion picture purposes.
37 (3) “Clip use” means a use of any portion of a motion picture, 38 other than the qualified motion picture, used in the qualified motion 39 picture.

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1 (4) “Credit certificate” means the certificate issued by the

2 California Film Commission pursuant to subparagraph (D) of 3 paragraph (3) of subdivision (g).
4 (5) “Diversity workplan checklist” means a checklist developed 5 by regulation by the California Film Commission that may include 6 consideration of inclusive hiring above the line, inclusive hiring 7 below the line, equity education, industry capacity building and 8 supplier diversity as part of any diversity workplan. 9 (6) (A) “Employee fringe benefits” means the amount allowable 10 as a deduction under this part to the qualified taxpayer involved 11 in the production of the qualified motion picture, exclusive of any 12 amounts contributed by employees, for any year during the 13 production period with respect to any of the following:
14 (i) Employer contributions under any pension, profit sharing, 15 annuity, or similar plan.
16 (ii) Employer-provided coverage under any accident or health 17 plan for employees.
18 (iii) The employer’s cost of life or disability insurance provided 19 to employees.
20 (B) Any amount treated as wages under clause (i) of 21 subparagraph (A) of paragraph (21) shall not be taken into account 22 under this paragraph.
23 (7) “Independent film” means a motion picture with a minimum 24 budget of one million dollars ($1,000,000) that is produced by a 25 company that is not publicly traded and publicly traded companies 26 do not own, directly or indirectly, more than 25 30 percent of the 27 producing company.
28 (8) “Jobs ratio” means the amount of qualified wages paid to 29 qualified individuals divided by the amount of tax credit, not 30 including any additional credit allowed pursuant to subparagraphs 31 (D) and (E) of paragraph (4) of subdivision (a), as computed by 32 the California Film Commission. For the purposes of the 33 calculation of the jobs ratio only, 70 percent of qualified 34 expenditures for visual effects paid to third-party vendors for work 35 performed in California shall be deemed to be qualified wages 36 paid to a qualified individual.
37 (9) “Licensing” means any grant of rights to distribute the 38 qualified motion picture, in whole or in part.
39 (10) “New use” means any use of a motion picture in a medium 40 other than the medium for which it was initially created.

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1 (11) “Pilot for a new television series” means the initial episode 2 produced for a proposed television series.
3 (12) (A) “Postproduction” means the final activities in a 4 qualified motion picture’s production, including editing, foley 5 recording, automatic dialogue replacement, sound editing, scoring, 6 music track recording by musicians and music editing, beginning 7 and end credits, negative cutting, negative processing and 8 duplication, the addition of sound and visual effects, sound mixing, 9 film-to-tape transfers, encoding, and color correction. 10 (B) “Postproduction” does not include the manufacture or 11 shipping of release prints or their equivalent.
12 (13) “Preproduction” means the process of preparation for actual 13 physical production which begins after a qualified motion picture 14 has received a firm agreement of financial commitment, or is 15 greenlit, with, for example, the establishment of a dedicated 16 production office, the hiring of key crew members, and includes, 17 but is not limited to, activities that include location scouting and 18 execution of contracts with vendors of equipment and stage space. 19 (14) “Principal photography” means the phase of production 20 during which the motion picture is actually shot, as distinguished 21 from preproduction and postproduction.
22 (15) “Production period” means the period beginning with 23 preproduction and ending upon completion of postproduction. 24 (16) “Qualified entity” means a personal service corporation as 25 defined in Section 269A(b)(1) of the Internal Revenue Code, a 26 payroll services corporation, or any entity receiving qualified wages 27 with respect to services performed by a qualified individual. 28 (17) “Qualified expenditures” means amounts paid or incurred 29 for tangible personal property purchased or leased, and used, within 30 this state in the production of a qualified motion picture and 31 payments, including qualified wages, for services performed within 32 this state in the production of a qualified motion picture. 33 (18) (A) “Qualified individual” means any individual who 34 performs services during the production period in an activity related 35 to the production of a qualified motion picture.
36 (B) “Qualified individual” shall not include either of the 37 following:
38 (i) Any individual related to the qualified taxpayer as described 39 in subparagraph (A), (B), or (C) of Section 51(i)(1) of the Internal 40 Revenue Code.

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1 (ii) Any 5-percent owner, as defined in Section 416(i)(1)(B) of

2 the Internal Revenue Code, of the qualified taxpayer. 3 (19) (A) “Qualified motion picture” means a motion picture 4 that is produced for distribution to the general public, regardless 5 of medium, that is one of the following:
6 (i) A feature with a minimum production budget of one million 7 dollars ($1,000,000).
8 (ii) A miniseries or limited series consisting of two or more 9 episodes, each longer than 40 minutes of running time, exclusive 10 of commercials, that is produced in California, with a minimum 11 production budget of one million dollars ($1,000,000) per episode. 12 (iii) An independent film.
13 (iv) A television series that relocated to California. 14 (v) A pilot for a new live action or animated television series 15 that is at least 20 minutes of running time, exclusive of 16 commercials, that is produced in California, and with a minimum 17 production budget of one million dollars ($1,000,000). 18 (vi) A live action or animated series, averaging across a season 19 at least 20 minutes of running time per episode, exclusive of 20 commercials, that is produced in California, with a minimum 21 production budget of one million dollars ($1,000,000) per episode. 22 (vii) An animated film that is produced in California, with a 23 minimum production budget of one million dollars ($1,000,000). 24 (viii) A large-scale competition show, not including traditional 25 reality, game shows, talk shows, or docufollow television 26 programming, that is produced in California, with a minimum 27 production budget of one million dollars ($1,000,000) per episode. 28 (B) To qualify as a “qualified motion picture,” all of the 29 following conditions shall be satisfied:
30 (i) At least 75 percent of the principal photography days occur 31 wholly in California or 75 percent of the production budget is 32 incurred for payment for services performed within the state and 33 the purchase or rental of property used within the state. 34 (ii) Production of the qualified motion picture is completed 35 within 30 months from the date on which the qualified taxpayer’s 36 application is approved by the California Film Commission. For 37 purposes of this section, a qualified motion picture is “completed” 38 when the process of postproduction has been finished.

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1 (iii) The copyright for the motion picture is registered with the 2 United States Copyright Office pursuant to Title 17 of the United 3 States Code.
4 (iv) (I) Except as provided in subclause (II), principal 5 photography of the qualified motion picture commences after the 6 date on which the application is approved by the California Film 7 Commission, but no later than 180 days after the date of that 8 approval if the qualified motion picture has a budget with qualified 9 expenditures of less than one hundred million dollars 10 ($100,000,000), and no later than 240 days after the date of that 11 approval in the case of a qualified motion picture with a budget 12 of qualified expenditures with at least one hundred million dollars 13 ($100,000,000), unless death, disability, or disfigurement of the 14 director or of a principal cast member; an act of God, including, 15 but not limited to, fire, flood, earthquake, storm, hurricane, or other 16 natural disaster; terrorist activities; or government sanction has 17 directly prevented a production’s ability to begin principal 18 photography within the prescribed 180- or 240-day commencement 19 period.
20 (II) Notwithstanding subclause (I), a production that has not 21 previously received an allocation under this section or Section 22 23685, 23695, or 23698, and that completed principal photography 23 of the previous season more than 48 months prior to the application 24 for a credit allocation under this section, shall be deemed not to 25 have commenced principal photography prior to the date on which 26 the application for an allocation of credit under this section is 27 approved by the California Film Commission.
28 (III) Notwithstanding subclauses (I) and (II), a television series 29 that did not commence principal photography prior to July 1, 2025, 30 and applied for but did not receive an allocation under this section 31 for its first season filming in California and makes an application 32 for allocation of credit for its second season filming in California 33 shall be deemed not to have commenced principal photography 34 prior to the date on which the application for an allocation of 35 credit under this section is approved by the California Film 36 Commission.
37 (v) (I) At least 75 percent of production costs for picture editing 38 and postproduction sound labor and services shall be incurred in 39 California.

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1 (II) This requirement shall only apply to a qualified motion 2 picture applying for an allocation of credits under this section 3 pursuant to subparagraph (G) of paragraph (8) of subdivision (k) 4 of Section 17053.98 or Section 23698.
5 (vi) Provides a diversity workplan checklist.
6 (C) For the purposes of subparagraph (A), in computing the 7 total wages paid or incurred for the production of a qualified 8 motion picture, all amounts paid or incurred by all persons or 9 entities that share in the costs of the qualified motion picture shall 10 be aggregated.
11 (D) “Qualified motion picture” shall not include commercial 12 advertising, music videos, a motion picture produced for private 13 noncommercial use, such as weddings, graduations, or as part of 14 an educational course and made by students, a news program, 15 current events or public events program, talk show, game show, 16 sporting event or activity, awards show, telethon or other 17 production that solicits funds, reality television program, except 18 as specified in clause (ix) of subparagraph (A), clip-based 19 programming if more than 50 percent of the content is comprised 20 of licensed footage, documentaries, variety programs, daytime 21 dramas, strip shows, or any production that falls within the 22 recordkeeping requirements of Section 2257 of Title 18 of the 23 United States Code.
24 (20) (A) “Qualified taxpayer” means a taxpayer who has paid 25 or incurred qualified expenditures, participated in the Career 26 Readiness requirement in Section 23695, and has been issued a 27 credit certificate by the California Film Commission pursuant to 28 subdivision (g).
29 (B) In the case of any pass-thru entity, the determination of 30 whether a taxpayer is a qualified taxpayer under this section shall 31 be made at the entity level and any credit under this section is not 32 allowed to the pass-thru entity, but shall be passed through to the 33 partners or shareholders in accordance with applicable provisions 34 of Part 10 (commencing with Section 17001) or Part 11 35 (commencing with Section 23001). For purposes of this paragraph, 36 “pass-thru entity” means any entity taxed as a partnership or “S” 37 corporation.
38 (C) In the case of an “S” corporation, the credit allowed under 39 this section shall not be used by an “S” corporation as a credit

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1 against a tax imposed under Chapter 4.5 (commencing with Section 2 23800) of Part 11 of Division 2.
3 (21) “Qualified visual effects” means visual effects where at 4 least 75 percent or a minimum of ten million dollars ($10,000,000) 5 of the qualified expenditures for the visual effects are paid or 6 incurred in California.
7 (22) (A) “Qualified wages” means all of the following:
8 (i) Any wages subject to withholding under Division 6 9 (commencing with Section 13000) of the Unemployment Insurance 10 Code that were paid or incurred by any taxpayer involved in the 11 production of a qualified motion picture with respect to a qualified 12 individual for services performed on the qualified motion picture 13 production within this state.
14 (ii) The portion of any employee fringe benefits paid or incurred 15 by any taxpayer involved in the production of the qualified motion 16 picture that are properly allocable to qualified wage amounts 17 described in clauses (i), (iii), and (iv).
18 (iii) Any payments made to a qualified entity for services 19 performed in this state by qualified individuals within the meaning 20 of paragraph (17).
21 (iv) Remuneration paid to an independent contractor who is a 22 qualified individual for services performed within this state by that 23 qualified individual.
24 (B) “Qualified wages” shall not include any of the following:
25 (i) Expenses, including wages, related to new use, reuse, clip 26 use, licensing, secondary markets, or residual compensation, or 27 the creation of any ancillary product, including, but not limited to, 28 a soundtrack album, toy, game, trailer, or teaser.
29 (ii) Expenses, including wages, paid or incurred with respect to 30 acquisition, development, turnaround, or any rights thereto. 31 (iii) Expenses, including wages, related to financing, overhead, 32 marketing, promotion, or distribution of a qualified motion picture. 33 (iv) Expenses, including wages, paid per person per qualified 34 motion picture for writers, directors, music directors, music 35 composers, music supervisors, producers, and performers, other 36 than background actors with no scripted lines.
37 (23) (A) “Recurring television allocation amount” means the 38 sum of the base year allocation and the product of all of the 39 following:
40 (i) The base year allocation.

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1 (ii) The number of subsequent years.

2 (iii) Three percent.
3 (B) For purposes of this paragraph, the following definitions 4 apply:
5 (i) “Base year allocation” means the amount received by the 6 recurring television series in its fiscal year 2025–26 Credit 7 Allocation Letter or Letters, or if no amounts were reserved in 8 fiscal year 2025–26, in the next fiscal year in which a Credit 9 Allocation Letter or Letters were received.
10 (ii) “The number of subsequent years” means the number of 11 full or partial fiscal years that have elapsed since the fiscal year in 12 with the base year allocation was made.
13 (24) “Recurring television series” means any television series 14 that was previously approved and issued a credit allocation letter 15 under this section.
16 (25) “Residual compensation” means supplemental
17 compensation paid at the time that a motion picture is exhibited 18 through new use, reuse, clip use, or in secondary markets, as 19 distinguished from payments made during production.
20 (26) “Reuse” means any use of a qualified motion picture in the 21 same medium for which it was created, following the initial use 22 in that medium.
23 (27) “Secondary markets” means media in which a qualified 24 motion picture is exhibited following the initial media in which it 25 is exhibited.
26 (28) “Television series that relocated to California” means a 27 television series, without regard to episode length or initial media 28 exhibition, with a minimum production budget of one million 29 dollars ($1,000,000) per episode, that filmed at least 75 percent of 30 principal photography days in its most recent season outside of 31 California or has filmed all seasons outside of California and for 32 which the taxpayer certifies that the credit provided pursuant to 33 this section is the primary reason for relocating to California. 34 (c) (1) (A) Notwithstanding subdivision (i) of Section 23036, 35 in the case where the credit allowed by this section exceeds the 36 taxpayer’s tax liability computed under this part, a qualified 37 taxpayer may elect to assign any portion of the credit allowed 38 under this section to one or more affiliated corporations for each 39 taxable year in which the credit is allowed.

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1 (B) For purposes of the election provided in subparagraph (A), 2 all of the following shall apply:
3 (i) The election may be based on any method selected by the 4 qualified taxpayer that originally receives the credit. 5 (ii) Once the election is made, it shall be irrevocable for the 6 taxable year the credit is allowed.
7 (iii) The election may be changed for any subsequent taxable 8 year if the election to make the assignment is expressly shown on 9 each of the returns of the qualified taxpayer and the qualified 10 taxpayer’s affiliated corporations that assign and receive the credits. 11 (iv) The election shall be reported to the Franchise Tax Board, 12 in the form and manner specified by the Franchise Tax Board, 13 along with all required information regarding the assignment of 14 the credit, including the corporation number, the federal employer 15 identification number, or other taxpayer identification number of 16 the assignee, and the amount of the credit assigned. 17 (C) For purposes of this paragraph, “affiliated corporation” has 18 the same meaning provided in subdivision (b) of Section 25110, 19 as of the last day of the taxable year in which the credit is allowed, 20 except that “100 percent” is substituted for “more than 50 percent” 21 wherever it appears in the section, and “voting common stock” is 22 substituted for “voting stock” wherever it appears in the section. 23 (2) Notwithstanding any other law, a qualified taxpayer may 24 sell any credit allowed under this section that is attributable to an 25 independent film, as defined in paragraph (7) of subdivision (b), 26 to an unrelated party.
27 (3) The qualified taxpayer shall report to the Franchise Tax 28 Board prior to the sale of the credit, in the form and manner 29 specified by the Franchise Tax Board, all required information 30 regarding the purchase and sale of the credit, including the social 31 security or other taxpayer identification number of the unrelated 32 party to whom the credit has been sold, the face amount of the 33 credit sold, and the amount of consideration received by the 34 qualified taxpayer for the sale of the credit.
35 (4) In the case where the credit allowed under this section 36 exceeds the “tax,” the excess credit may be carried over to reduce 37 the “tax” in the following taxable year, and succeeding eight 38 taxable years, if necessary, until the credit has been exhausted. 95 — 109 — AB 1138
1 (5) A credit shall not be sold pursuant to this subdivision to

2 more than one taxpayer, nor may the credit be resold by the 3 unrelated party to another taxpayer or other party.
4 (6) A party that has been assigned or acquired tax credits under 5 this subdivision shall be subject to the requirements of this section. 6 (7) In no event may a qualified taxpayer assign or sell any tax 7 credit to the extent the tax credit allowed by this section is claimed 8 on any tax return of the qualified taxpayer.
9 (8) In the event that both the taxpayer originally allocated a 10 credit under this section by the California Film Commission and 11 a taxpayer to whom the credit has been sold both claim the same 12 amount of credit on their tax returns, the Franchise Tax Board may 13 disallow the credit of either taxpayer, so long as the statute of 14 limitations upon assessment remains open.
15 (9) Chapter 3.5 (commencing with Section 11340) of Part 1 of 16 Division 3 of Title 2 of the Government Code does not apply to 17 any standard, criterion, procedure, determination, rule, notice, or 18 guideline established or issued by the Franchise Tax Board 19 pursuant to this subdivision.
20 (10) Subdivision (g) of Section 23036 shall not apply to any 21 credit sold pursuant to this subdivision.
22 (11) For purposes of this subdivision, the following shall apply:
23 (A) The unrelated party or parties that purchase a credit pursuant 24 to paragraphs (2) to (10), inclusive, shall be treated as a qualified 25 taxpayer pursuant to paragraph (1) of subdivision (a). 26 (B) An affiliated corporation or corporations that are assigned 27 a credit pursuant to paragraph (1) shall be treated as a qualified 28 taxpayer pursuant to paragraph (1) of subdivision (a). 29 (d) (1) No credit shall be allowed pursuant to this section unless 30 the qualified taxpayer provides the following to the California 31 Film Commission:
32 (A) Identification of each qualified individual.
33 (B) The specific start and end dates of production. 34 (C) The total wages paid.
35 (D) The total amount of qualified wages paid to qualified 36 individuals.
37 (E) Aggregate data for individuals whose wages are excluded 38 from qualified wages by clause (iv) of subparagraph (B) of 39 paragraph (22) of subdivision (b), including their gender, ethnic, 40 and racial makeup.

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1 (F) The copyright registration number, as reflected on the 2 certificate of registration issued under the authority of Section 410 3 of Title 17 of the United States Code, relating to registration of 4 claim and issuance of certificate. The registration number shall be 5 provided on the return claiming the credit.
6 (G) The total amounts paid or incurred to purchase or lease 7 tangible personal property used in the production of a qualified 8 motion picture.
9 (H) Information to substantiate its qualified expenditures. 10 (I) Information required by the California Film Commission 11 under regulations promulgated pursuant to subdivision (g) 12 necessary to verify the amount of credit claimed.
13 (J) Data regarding the diversity of the workforce employed by 14 the applicant on the qualified motion picture, as described in 15 subdivision (g).
16 (K) Documentation verifying completion of the Career 17 Readiness requirement.
18 (L) Documentation verifying that the qualified taxpayer paid 19 the Career Pathways Program fee.
20 (2) (A) Based on the information provided in paragraph (1), 21 the California Film Commission shall recompute the jobs ratio 22 previously computed in subdivision (g) and compare this 23 recomputed jobs ratio to the jobs ratio that the qualified taxpayer 24 previously listed on the application submitted pursuant to 25 subdivision (g).
26 (B) (i) If the California Film Commission determines that the 27 jobs ratio has been reduced by more than 10 percent for a qualified 28 motion picture, the California Film Commission shall reduce the 29 amount of credit allowed by an equal percentage, unless the 30 qualified taxpayer demonstrates, and the California Film 31 Commission determines, that reasonable cause exists for the jobs 32 ratio reduction.
33 (ii) If the California Film Commission determines that the jobs 34 ratio has been reduced by more than 20 percent for a qualified 35 motion picture, the California Film Commission shall not accept 36 an application described in subdivision (g) from that qualified 37 taxpayer or any member of the qualified taxpayer’s controlled 38 group for a period of not less than one year from the date of that 39 determination, unless the qualified taxpayer demonstrates, and the

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1 California Film Commission determines, that reasonable cause 2 exists for the jobs ratio reduction.
3 (C) For the purposes of this paragraph, “reasonable cause” 4 means unforeseen circumstances beyond the control of the qualified 5 taxpayer, such as, but not limited to, the cancellation of a television 6 series prior to the completion of the scheduled number of episodes 7 or other similar circumstances as determined by the California 8 Film Commission in regulations to be adopted pursuant to 9 subdivision (e).
10 (e) (1) (A) Subject to the Administrative Procedure Act 11 (Chapter 3.5 (commencing with Section 11340) of Part 1 of 12 Division 3 of Title 2 of the Government Code), the California Film 13 Commission shall prescribe rules and regulations to carry out the 14 purposes of this section, including, but not limited to, the following:
15 (i) Subparagraph (D) of paragraph (4) of subdivision (a) and 16 clause (iv) of subparagraph (D) of paragraph (2) of subdivision 17 (g).
18 (ii) Any rules and regulations necessary to establish procedures, 19 processes, requirements, and applications.
20 (iii) (I) Continuing a Career Pathways Program established 21 pursuant to subdivision (e) of Sections 17053.98 and 23698 23698, 22 and pursuant to paragraph (10) of subdivision (g) of this section 23 and Section 17053.98.1, to fund technical skills training for 24 individuals from underserved communities for entry into film and 25 television jobs. The program shall be funded by a fee equal to 0.5 26 percent of the approved credit amount for a qualified motion 27 picture. The program shall work with nonprofit organizations that 28 have an established record of training and job placement in the 29 entertainment industry, focus on training individuals from 30 traditionally underserved communities, and offer training courses 31 focused on skilled, technical positions that would be eligible for 32 qualified wages if performed on a qualified motion picture as well 33 as administrative- and industry-related technical occupations or 34 soft skills training for the motion picture industry. 35 (II) Notwithstanding subclause (I), independent films are 36 required to pay a fee equal to 0.25 percent of the approved credit 37 amount for a qualified motion picture.
38 (iv) (I) Beginning January 1, 2028, the California Film 39 Commission, in collaboration with labor and industry stakeholders, 40 has the authority to increase the Career Pathways Training program

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1 fee by 0.25 percent per year, up to 1 percent of the approved credit 2 amount for a qualified motion picture, based on evaluation of 3 available information, including, but not limited to, the number of 4 jobs available, job growth in the industry, and information included 5 in the annual reports of the Career Pathways Training program 6 required pursuant to paragraph (10) (11) of subdivision (g). The 7 evaluation shall be included in the annual report to the Legislature. 8 (II) Independent films are not subject to an increase to the fee 9 pursuant to subclause (I).
10 (B) Notwithstanding any other law, prior to preparing a notice 11 of proposed action pursuant to Section 11346.4 of the Government 12 Code and prior to making any revision to the proposed regulation 13 other than a change that is nonsubstantial or solely grammatical 14 in nature, the Governor’s Office of Business and Economic 15 Development shall first approve the proposed regulation or 16 proposed change to a proposed regulation regarding allocating the 17 credit pursuant to subdivision (i), computing the jobs ratio as 18 described in subdivisions (d) and (g), and defining “reasonable 19 cause” pursuant to subparagraph (C) of paragraph (2) of subdivision 20 (d).
21 (2) The California Film Commission shall not be required to 22 prepare an economic impact analysis pursuant to the Administrative 23 Procedure Act (Chapter 3.5 (commencing with Section 11340) of 24 Part 1 of Division 3 of Title 2 of the Government Code) with regard 25 to any rules and regulations adopted pursuant to this subdivision. 26 (f) If the qualified taxpayer fails to provide the copyright 27 registration number as required in subparagraph (E) of paragraph 28 (1) of subdivision (d), the credit shall be disallowed and assessed 29 and collected under Section 19051 until the procedures are 30 satisfied.
31 (g) For purposes of this section, the California Film Commission 32 shall do all of the following:
33 (1) Subject to the requirements of subparagraphs (A) to (E), 34 inclusive, of paragraph (2), on or after July 1, 2025, and before 35 July 1, 2030, in four or more allocation periods per fiscal year, 36 allocate tax credits to applicants.
37 (2) (A) Establish a procedure for applicants to file with the 38 California Film Commission a written application, on a form jointly 39 prescribed by the California Film Commission and the Franchise

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1 Tax Board for the allocation of the tax credit. The application shall

2 include, but not be limited to, all of the following information:
3 (i) The budget for the motion picture production.
4 (ii) The number of production days.
5 (iii) A financing plan for the production.
6 (iv) The diversity of the workforce employed by the applicant, 7 including, but not limited to, the ethnic and racial makeup of the 8 individuals employed by the applicant during the production of 9 the qualified motion picture, to the extent possible. 10 (v) The amount of qualified wages the applicant expects to pay 11 to qualified individuals.
12 (vi) The amount of tax credit the applicant computes the 13 qualified motion picture will receive, applying the applicable credit 14 percentages described in paragraph (4) of subdivision (a). 15 (vii) A statement establishing that the tax credit described in 16 this section is a significant factor in the applicant’s choice of 17 location for the qualified motion picture. The statement shall 18 include information about whether the qualified motion picture is 19 at risk of not being filmed or specify the jurisdiction or jurisdictions 20 in which the qualified motion picture will be located in the absence 21 of the tax credit. The statement shall be signed by an officer or 22 executive of the applicant.
23 (viii) The applicant’s written policy against unlawful harassment, 24 including, but not limited to, sexual harassment, which includes 25 procedures for reporting and investigating harassment claims, a 26 phone number for an individual who will be responsible for 27 receiving harassment claims, and a statement that the company 28 will not retaliate against an individual who reports harassment. 29 The applicant shall also indicate how the policy will be distributed 30 to employees and include a summary of education training 31 resources, including the prohibition against, and prevention and 32 correction of, sexual harassment and remedies available. 33 (ix) If applicable, summary of the applicant’s voluntary 34 programs to increase the representation of minorities and women 35 in the job classifications that are not included in qualified wages 36 as set forth in clause (iv) of subparagraph (B) of paragraph (22) 37 of subdivision (b) and information about how these programs are 38 publicized to interested parties. The officer or executive referenced 39 in clause (xi) who is signing the statement shall provide additional

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1 information about these programs, if needed and upon request, to 2 the California Film Commission.
3 (x) Any other information deemed relevant by the California 4 Film Commission or the Franchise Tax Board.
5 (B) Establish criteria, consistent with the requirements of this 6 section, for allocating tax credits.
7 (C) Determine and designate applicants who meet the 8 requirements of this section.
9 (D) For purposes of allocating the credit amounts subject to the 10 categories described in subdivision (i) in any fiscal year, the 11 California Film Commission shall do all of the following:
12 (i) For each allocation date and for each category, list each 13 applicant from highest to lowest according to the jobs ratio as 14 computed by the California Film Commission.
15 (ii) Subject to the applicable credit percentage, allocate the credit 16 to each applicant according to the highest jobs ratio, working down 17 the list, until the credit amount is exhausted.
18 (iii) (I) Pursuant to regulations adopted pursuant to subdivision 19 (e), the California Film Commission may increase the jobs ratio 20 by up to 25 percent if a qualified motion picture increases economic 21 activity in California according to criteria developed by the 22 California Film Commission that would include, but not be limited 23 to, those factors as, the amount of the production and 24 postproduction spending in California, the utilization employment 25 of scoring musicians in California, and other criteria measuring 26 economic impact in California as determined by the California 27 Film Commission. The criteria developed by the California Film 28 Commission shall not assess fewer points for the employment of 29 scoring musicians in California than any other category within 30 the jobs ratio bonus.
31 (II) For qualified motion pictures that are described in clause 32 (i) of subparagraph (G) of paragraph (8) of subdivision (k) of 33 Section 17053.98 and Section 23698, the jobs ratio shall be equal 34 to the product of the jobs ratio calculated in paragraph (8) of 35 subdivision (b) and 133 percent.
36 (iv) (I) Notwithstanding any other law, any television series, 37 relocating television series, or any new television series based on 38 a pilot for a new television series that has been approved and issued 39 a credit allocation by the California Film Commission under this 40 section or Section 17053.85, 17053.95, 17053.98, 17053.98.1,

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1 23685, 23695, or 23698 shall be issued a credit for each subsequent

2 season, for the life of that television series whenever credits are 3 allocated within a fiscal year.
4 (II) Notwithstanding subclause (I), a recurring television series 5 that does not request a credit allocation within 18 months from the 6 date of completion of principal photography of the previous season 7 is deemed to have waived the credit allocation guarantee provided 8 by this clause and must reapply for a credit allocation. The 9 California Film Commission may by regulation determine the 10 appropriate priority to be given in a reapplication process for a 11 recurring series reapplying pursuant to this subclause. 12 (III) The California Film Commission shall limit the amount of 13 credits any recurring television series, including a recurring 14 television series under subdivision (k) of Section 23698, receives 15 in a subsequent season to no more than the recurring television 16 allocation amount.
17 (IV) In the event that insufficient tax credits are available to 18 fund all recurring television series pursuant to this clause for any 19 fiscal year or in the event the California Film Commission projects, 20 in collaboration with the Department of Finance, that there will 21 be insufficient tax credits available to fund all recurring television 22 series in either of the subsequent two fiscal years, the California 23 Film Commission shall make the following adjustments in the 24 order given until the shortfall, or any projected shortfall for the 25 two subsequent fiscal years, for recurring television series is 26 eliminated:
27 (V) (ia) Notwithstanding clause (iii) of subparagraph (A) of 28 paragraph (2) of subdivision (i), the California Film Commission 29 may redirect up to 100 percent of the credit amounts allocated to 30 the relocating television series category to recurring television 31 series for that fiscal year until the shortfall or projected shortfall 32 is eliminated.
33 (ib) Notwithstanding clause (iv) of subparagraph (A) of 34 paragraph (2) of subdivision (i), the California Film Commission 35 may redirect up to 100 percent of the credit amounts allocated to 36 a new television series to recurring television series for that fiscal 37 year until the shortfall or projected shortfall is eliminated. 38 (ic) Notwithstanding clause (ii) of subparagraph (A) of 39 paragraph (2) of subdivision (i), the California Film Commission 40 may redirect up to 100 percent of the credit allocations from the

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1 features category to the recurring television series category for 2 that fiscal year until the shortfall is eliminated.
3 (id) Allocate up to 25 percent of total credit allocations that 4 would otherwise be allocated in the 2029–30 fiscal year to recurring 5 television series in the current fiscal year until the shortfall is 6 eliminated. Any amounts transferred for allocation in the current 7 fiscal year shall be subtracted from the amount allowed to be 8 allocated in the 2029–30 fiscal year as specified in subdivision (i). 9 Notwithstanding paragraph (3), the credit allocations that are 10 subtracted from the 2029–30 fiscal year shall not be certified until 11 July 1, 2030, or later.
12 (ie) The California Film Commission shall consult with the 13 qualified taxpayers who are producing the recurring television 14 series for purposes of negotiating a minimally impactful reduction 15 in the amount of credits awarded to each recurring television series 16 for that fiscal year until the shortfall is eliminated. 17 (E) Subject to the annual cap and the allocation credit amounts 18 based on categories described in subdivision (i), allocate an 19 aggregate amount of credits under this section and Section 20 17053.98.1, and allocate any carryover of unallocated or unused 21 credits from prior years and Sections 17053.85, 17053.95, 22 17053.98, 23685, 23695, and 23698 and the amount of any credits 23 reduced pursuant to paragraph (2) of subdivision (d). 24 (3) Certify tax credits allocated to qualified taxpayers and do 25 all of the following:
26 (A) Establish a verification procedure to do both of the 27 following:
28 (i) Update the information in subparagraph (A) of paragraph 29 (2) of subdivision (g), including, but not limited to, the amounts 30 of qualified expenditures paid or incurred by the applicant. 31 (ii) Ensure that the final safety evaluation report required 32 pursuant to Section 9152 of the Labor Code has been submitted. 33 (B) Establish audit requirements that shall be satisfied before a 34 credit certificate may be issued by the California Film Commission. 35 (C) Issue a credit certificate to a qualified taxpayer upon 36 completion of the qualified motion picture reflecting the credit 37 amount allocated after qualified expenditures have been verified 38 and the jobs ratio computed under this section. The amount of 39 credit shown on the credit certificate shall not exceed the amount 40 of credit allocated to that qualified taxpayer pursuant to this section.

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1 (D) (i) Notwithstanding any other law, the California Film

2 Commission shall certify a credit amount equal to 96 percent of 3 the total credit allocated to the qualified taxpayer, unless the 4 qualified taxpayer chooses to submit a diversity workplan and the 5 California Film Commission determines that the qualified taxpayer 6 has met or made a good-faith effort to meet the diversity goals in 7 its diversity workplan, pursuant to clause (ii).
8 (ii) The California Film Commission shall certify an additional 9 credit amount equal to 4 percent of the total credit allocated to the 10 qualified taxpayer if a qualified taxpayer submits to the California 11 Film Commission, in the form and manner required by the 12 commission, all of the following:
13 (I) A diversity workplan within 30 days after receiving a credit 14 allocation letter. The workplan shall be consistent with the diversity 15 workplan checklist to address diversity and be broadly reflective 16 of California’s population in terms of race, ethnicity, gender, and 17 disability status, and shall include all of the following:
18 (ia) A statement of the diversity goals the motion picture will 19 seek to achieve in terms of qualified wages.
20 (ib) A statement of the diversity goals the motion picture will 21 seek to achieve for individuals whose wages are excluded from 22 qualified wages.
23 (ic) A plan of what strategies the motion picture will employ to 24 achieve the goals in this subclause and subclause (II). 25 (id) Other requirements as the California Film Commission 26 shall determine by regulation.
27 (II) An interim assessment on the qualified taxpayer’s efforts 28 to meet the diversity workplan prior to the commencement of 29 principal photography. Upon review pursuant to a procedure 30 prescribed in regulations, the California Film Commission shall 31 determine whether the interim assessment indicates that the 32 qualified motion picture is making a good-faith effort to meet the 33 goals of the diversity workplan and shall notify the qualified motion 34 picture of its findings.
35 (III) A final diversity assessment that includes information about 36 how the project met or made a good-faith effort to meet the 37 diversity workplan, including, but not limited to, aggregate data 38 voluntarily self-reported by individuals whose wages are included 39 in qualified wages and individuals whose wages are excluded from

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1 qualified wages, with regard to their race, ethnicity, gender, and 2 disability status.
3 (iii) The California Film Commission, in consultation with the 4 Governor’s Office of Business and Economic Development, shall 5 establish guidelines to evaluate diversity workplans as described 6 in this subparagraph. The guidelines shall be posted on the 7 California Film Commission’s internet website.
8 (iv) The California Film Commission shall approve or reject 9 the diversity workplan of an applicant, to the extent allowed by 10 federal and state law.
11 (v) This subparagraph shall not apply to an independent film 12 with qualified expenditures of ten million dollars ($10,000,000) 13 or less.
14 (vi) The requirements of this subparagraph shall not apply to a 15 recurring television series receiving an allocation of credits under 16 this section pursuant to clause (ii) of subparagraph (G) of paragraph 17 (8) of subdivision (k) of Section 17053.98 or Section 23698 and 18 fulfills the diversity workplan and report requirements pursuant 19 to subdivision (k) of Section 17053.98 or Section 23698. 20 (vii) A qualified motion picture described in subparagraph (D) 21 of paragraph (8) of subdivision (k) of Section 17053.98 or Section 22 23698 that applies for an allocation of credits under this section 23 shall be subject to the requirements of this subparagraph and not 24 those of clause (iv) of subparagraph (B) of paragraph (2) of 25 subdivision (k) of Sections 17053.98 and 23698 and paragraph (3) 26 of subdivision (k) of Sections 17053.98 and 23698.
27 (4) Obtain, when possible, the following information from 28 applicants that do not receive an allocation of credit:
29 (A) Whether the qualified motion picture that was the subject 30 of the application was completed.
31 (B) If completed, in which state or foreign jurisdiction was the 32 primary principal photography completed.
33 (C) Whether the applicant received any financial incentives 34 from the state or foreign jurisdiction to make the qualified motion 35 picture in that location.
36 (5) Provide the Legislative Analyst’s Office, upon request, any 37 or all application materials or any other materials received from, 38 or submitted by, applicants for which a credit allocation decision 39 has been made, including, but not limited to, applicants that did 40 not receive a credit allocation. Materials provided to the Legislative

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1 Analyst’s Office shall be in electronic format when available and 2 include, but not be limited to, information provided pursuant to 3 subclause (I) to (III), inclusive, of clause (ii) of subparagraph (D) 4 of paragraph (3).
5 (6) The information provided to the California Film Commission 6 pursuant to this section shall constitute confidential tax information 7 for purposes of Article 2 (commencing with Section 19542) of 8 Chapter 7 of Part 10.2.
9 (7) (A) Notwithstanding any other law, on or after July 1, 2030, 10 the California Film Commission may allocate, pursuant to this 11 section, any previously allocated credits not certified that have not 12 previously been added to credit amounts available for allocation 13 under this section or a successor section or sections. 14 (B) For purposes of this section, “previously allocated credits 15 not certified” means either of the following:
16 (i) Credits allocated under paragraph (1) for which the qualified 17 taxpayer to which the credit amounts were originally allocated has 18 notified the California Film Commission in writing that the 19 qualified taxpayer will not request certification for the allocated 20 credits.
21 (ii) The difference between the amount of credits allocated under 22 paragraph (1) to a qualified taxpayer and the amount of credits the 23 California Film Commission certified, for that qualified taxpayer. 24 For purposes of calculating the difference, the California Film 25 Commission shall not consider any credit amounts for which the 26 qualified taxpayer notifies the California Film Commission under 27 clause (i).
28 (8) Notwithstanding any other law, on or after July 1, 2030, the 29 California Film Commission may allocate, pursuant to this section, 30 any credit amounts described in subparagraphs (B) and (E) of 31 paragraph (1) of subdivision (i) that have not previously been 32 added to credit amounts available for allocation under this section 33 or a successor section or sections.
34 (9) The California Film Commission shall submit a report to 35 the Legislature, on an annual basis beginning June 30, 2027, 36 containing diversity data provided by the applicants. The report 37 shall contain, in the aggregate and per project, an assessment of 38 whether the diversity workplan goals required by this section were 39 met for qualified motion pictures that submitted the final 40 assessment to the California Film Commission in the prior fiscal

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1 year. The assessment shall contain an account of diversity 2 workplans submitted, interim assessments submitted, and final 3 assessments submitted, as well as which categories of the diversity 4 workplan checklist established pursuant to paragraph (5) of 5 subdivision (b) were included. In the event that a report is required 6 pursuant to paragraph (9) of subdivision (g) of Section 17053.98 7 and Section 23698 in the same year as a report is required under 8 this paragraph, the reports may be combined into one report. The 9 California Film Commission shall submit each such assessment 10 to the Legislature in compliance with section 9795 of the 11 Government Code.
12 (10) (A) The California Film Commission shall expand the 13 number of nonprofit organizations that partner with the Career 14 Pathways program to build upon their ongoing efforts to provide 15 access to the widest cross section of Californians, including 16 historically disadvantaged and underrepresented individuals 17 seeking training and employment opportunities in motion picture 18 and television production.
19 (B) (i) The California Film Commission shall establish an 20 application process for career-based nonprofit organizations to 21 obtain approval as a Career Pathways program.
22 (ii) The application shall be submitted to the California Film 23 Commission’s fiscal agent during a request for proposal process 24 initiated by the fiscal agent.
25 (iii) The first request for proposal process shall be initiated by 26 the California Film Commission or its fiscal agent prior to the 27 first allocation of credits allowed under this section. 28 (iv) The second request for proposal process shall be initiated 29 by the California Film Commission or its fiscal agent as needed 30 in response to changes in program revenue or training partners, 31 but no later than July 1, 2027.
32 (v) Subsequent request for proposal processes shall be initiated 33 by the California Film Commission or its fiscal agent as the 34 commission deems necessary.
35 (C) The California Film Commission shall approve Career 36 Pathways programs. Career Pathways programs shall meet all of 37 the following requirements:
38 (i) Be conducted by a nonprofit organization that has an 39 established record of training and job placement in the 40 entertainment industry.

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1 (ii) Be focused on training individuals 18 years or older from 2 traditionally underserved communities.
3 (iii) Offer training courses focused on one or more of the 4 following:
5 (I) Skilled, technical positions that would be eligible for qualified 6 wages if performed on a qualified motion picture.
7 (II) Administrative- and industry-related technical occupations. 8 (III) Soft skills training for the motion picture industry. 9 (iv) Meet minimum qualifications and standards for high-quality, 10 skill-based training programs, as determined by the California 11 Film Commission through regulations and in consultation with 12 stakeholders.
13 (D) To ensure the Career Pathways program is successful and 14 has a meaningful impact, the California Film Commission and its 15 fiscal agent shall, in addition to the requirements specified in 16 subparagraph (C), consider the following aspects when evaluating 17 applications:
18 (i) Availability of participants.
19 (ii) Fiscal agent administrative resources.
20 (iii) Overlap with the focus areas of currently approved 21 organizations, including, but not limited to, industry role focus 22 and student outreach focus.
23 (iv) Specific industry labor needs, as determined by the fiscal 24 agent and based on information provided by industry and labor 25 stakeholders.
26 (E) Before July 1, 2026, the California Film Commission shall 27 develop criteria to incentivize supplemental placement of 1 to 4 28 trainees from the Career Pathways Program per qualified 29 production. The placement of the trainees shall not displace 30 otherwise anticipated or necessary hiring of experienced 31 employees. Trainee wages shall be excluded from a production’s 32 qualified wages for purposes of the jobs ratio and incentive 33 calculation.
34 (10)
35 (11) Beginning January 1, 2025, the California Film 36 Commission shall collect information to the extent available and 37 based on data provided by the Career Pathways Training program, 38 about the breakdown of spending by the Career Pathways Program, 39 how participation in the Career Pathways Program by both program 40 partners and participants has changed in comparison to prior years,

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1 whether graduates of the program are accessing jobs in the film

2 industry upon completion of the program, what projects the 3 students have worked on, whether those projects received a tax 4 credit, whether students are employed in California or another 5 state, and the aggregated self-reported and voluntarily provided 6 ethnic, racial, gender, and disability status of such individuals. The 7 California Film Commission shall report to the Legislature, in 8 compliance with Section 9795 of the Government Code, and 9 publish on its internet website an annual report about the Career 10 Pathways Training program, with the above information. Such 11 information shall be reported for participants for five years 12 following a participant’s completion of the Career Pathways 13 Training program, to the extent the information is available. This 14 paragraph shall be applicable consistent with federal and state law. 15 (h) (1) The California Film Commission shall annually provide 16 the Legislative Analyst’s Office, the Franchise Tax Board, and the 17 California Department of Tax and Fee Administration with a list 18 of qualified taxpayers and the tax credit amounts allocated to each 19 qualified taxpayer by the California Film Commission. The list 20 shall include the names and taxpayer identification numbers, 21 including taxpayer identification numbers of each partner or 22 shareholder, as applicable, of the qualified taxpayer. 23 (2) (A) Notwithstanding paragraph (6) of subdivision (g), the 24 California Film Commission shall annually post on its internet 25 website and make available for public release all of the following:
26 (i) A table which includes all of the following information: a 27 list of qualified taxpayers and the tax credit amounts allocated to 28 each qualified taxpayer by the California Film Commission, the 29 number of production days in California the qualified taxpayer 30 represented in its application would occur, the number of California 31 jobs that the qualified taxpayer represented in its application would 32 be directly created by the production, and the total amount of 33 qualified expenditures expected to be spent by the production. 34 (ii) A narrative staff summary describing the production of the 35 qualified taxpayer as well as background information regarding 36 the qualified taxpayer contained in the qualified taxpayer’s 37 application for the credit.
38 (iii) The diversity report submitted annually to the Legislature 39 described in paragraph (2) of subdivision (g) organized per 40 production and an aggregate compilation describing the voluntary

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1 programs collected pursuant to clause (xiii) of subparagraph (A) 2 of paragraph (2) of subdivision (g).
3 (B) Nothing in this subdivision shall be construed to make the 4 information submitted by an applicant for a tax credit under this 5 section a public record, including for the purposes of the California 6 Public Records Act (Division 10 (commencing with Section 7 7920.000) of Title 1 of the Government Code).
8 (3) The California Film Commission shall provide each city 9 and county in California with an instructional guide that includes, 10 but is not limited to, a review of best practices for facilitating 11 motion picture production in local jurisdictions, resources on 12 hosting and encouraging motion picture production, and the 13 California Film Commission’s Model Filming Ordinance. The 14 California Film Commission shall maintain on its internet website 15 a list of initiatives by locality that encourage motion picture 16 production in regions across the state. The list shall be distributed 17 to each approved applicant for the program to highlight local 18 jurisdictions that offer incentives to facilitate film production. 19 (i) (1) (A) The aggregate amount of credits that may be 20 allocated for a fiscal year pursuant to this section and Section 21 17053.98.1, except as provided in subdivision (k) of Section 23698 22 and subdivision (k) of Section 17053.98, is three hundred thirty 23 million dollars ($330,000,000), plus any amount described in 24 subparagraph (B), (C), (D), or (E) in credits for the 2025–26 fiscal 25 year and each fiscal year thereafter, through and including the 26 2029–30 fiscal year, except as provided in paragraph (7) of 27 subdivision (g).
28 (B) (i) Subject to clauses (ii) and (iii), the unused allocation 29 credit amount, if any, for the preceding fiscal year. 30 (ii) The amount of unused credit allocation attributable to 31 independent films shall only be allocated according to clause (i) 32 of subparagraph (A) of paragraph (2).
33 (iii) The total amount of any unused credit allocation amount 34 that is remaining shall only be allocated pursuant to clause (iv) of 35 subparagraph (A) of paragraph (2).
36 (C) The amount of previously allocated credits not certified. 37 (D) The amount of any credits reduced pursuant to paragraph 38 (2) of subdivision (d).
39 (E) That portion of any unused allocation credit amount, if any, 40 attributable to Section 17053.85, 17053.95, 17053.98, 23685,

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1 23695, or 23698 available for that fiscal year in a manner as

2 determined by regulations promulgated by the California Film 3 Commission.
4 (2) (A) Notwithstanding the foregoing, and subject to paragraph 5 (4) of this subdivision and changes in allocations pursuant to clause 6 (v) of subparagraph (D) of paragraph (2) of subdivision (g), the 7 California Film Commission shall allocate the credit amounts 8 subject to the following categories, but shall have discretion to 9 reallocate up to 10 30 percent of the funds within any category 10 amongst the remaining categories to maximize the amount of total 11 credits allocated:
12 (i) Independent films with qualified expenditures of ten million 13 dollars ($10,000,000) or less shall be allocated 5 percent of the 14 amount specified in paragraph (1). Independent films with qualified 15 expenditures in excess of ten million dollars ($10,000,000) shall 16 be allocated 5 percent of the amount specified in paragraph (1). 17 These amounts shall be in addition to any unused allocation credit 18 amount, if any, for the preceding fiscal year as described in 19 subparagraph (B) of paragraph (1).
20 (ii) Features and animated films shall be allocated 35 percent 21 of the amount specified in paragraph (1).
22 (iii) A relocating television series shall be allocated 15 percent 23 of the amount specified in paragraph (1).
24 (iv) A television series described in clause (ii), (v), (vi), or (viii) 25 of subparagraph (A) of paragraph (19) of subdivision (b) and a 26 recurring television series shall be allocated 40 percent of the 27 amount specified in paragraph (1), plus any unused allocation 28 credit amount, if any, for the preceding fiscal year as described in 29 subparagraph (B) of paragraph (1).
30 (B) Within any allocation period for credits to a relocating 31 television series, any unused amount shall be reallocated to the 32 category described in clause (iv) of subparagraph (A) and, if any 33 unused amount remains, reallocated in the next allocation period 34 for credits to a relocating television series.
35 (C) With respect to a relocating television series issued a credit 36 in a subsequent year pursuant to clause (v) of subparagraph (D) 37 of paragraph (2) of subdivision (g), that subsequent credit amount 38 shall be allowed from the allocation amount described in clause 39 (iv) of subparagraph (A).

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1 (3) Any act that reduces the amount that may be allocated 2 pursuant to paragraph (1) constitutes a change in state taxes for 3 the purpose of increasing revenues within the meaning of Section 4 3 of Article XIII A of the California Constitution and may be passed 5 by not less than two-thirds of all Members elected to each of the 6 two houses of the Legislature.
7 (4) A qualified motion picture, as defined in subdivision (k) of 8 Sections 17053.98 and 23698, shall not be eligible for an allocation 9 under subdivisions (a) to (j), inclusive, if it receives a credit under 10 subdivision (k) of Section 17053.98 or Section 23698 during that 11 fiscal year.
12 (j) The California Film Commission shall have the authority to 13 allocate tax credits in accordance with this section and in 14 accordance with any regulations prescribed pursuant to subdivision 15 (e) upon adoption.
16 (k) (1) A qualified taxpayer may make a one-time election to 17 be paid a refund for each taxable year of the refundable period, 18 not to exceed the annual refundable amount.
19 (2) For purposes of this subdivision, the following definitions 20 shall apply:
21 (A) “Annual refundable amount” means 20 percent of the total 22 refundable amount.
23 (B) (i) “Credit amount” means the credit amount specified in 24 the credit certificate issued to the qualified taxpayer by the 25 California Film Commission pursuant to subdivision (g). 26 (ii) In the case of a pass-thru entity, the “credit amount” means 27 the pro rata share or distributive share of the credit passed through 28 to the partner or shareholder of the qualified taxpayer. For purposes 29 of this clause, the term “pass-thru entity” means any partnership, 30 “S” corporation, or limited liability company treated as a 31 partnership.
32 (iii) In the case of an assigned credit, the “credit amount” means 33 the credit amount that was assigned to the taxpayer. 34 (C) “Refundable period” means the first taxable year that the 35 credit certificate is issued to the qualified taxpayer by the California 36 Film Commission pursuant to subdivision (g), and the succeeding 37 four taxable years.
38 (D) “Total refundable amount” means 100 percent of the credit 39 amount that exceeds the “tax” in the first taxable year of the 40 refundable period.

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1 (3) The refund shall be computed as follows:

2 (A) (i) In the first taxable year of the refundable period, the 3 credit amount shall be allowed against the “tax” computed under 4 this part for the taxable year.
5 (ii) If the credit allowed by this section exceeds the “tax” in the 6 first taxable year of the refundable period, the annual refundable 7 amount shall be refunded to the qualified taxpayer.
8 (B) (i) In each taxable year after the first taxable year of the 9 refundable period, the annual refundable amount shall be allowed 10 as a credit against the “tax” computed under this part for the taxable 11 year, and the excess, if any, shall be refunded to the qualified 12 taxpayer.
13 (ii) If the qualified taxpayer’s tax liability for the taxable year 14 exceeds the annual refundable amount, only the annual refundable 15 amount shall be allowed as a credit against the qualified taxpayer’s 16 “tax.”
17 (4) (A) In the first taxable year of the refundable period, the 18 total refundable amount, less the annual refundable amount, shall 19 be carried over to the succeeding taxable year.
20 (B) In each taxable year other than the first taxable year of the 21 refundable period, the total refundable amount, less the annual 22 refundable amount allowed as a credit against the qualified 23 taxpayer’s “tax” or refunded in the current and prior taxable years 24 in the refundable period, shall be carried over to the next 25 succeeding year of the refundable period.
26 (C) Notwithstanding paragraph (3) of subdivision (c), if an 27 election is made pursuant to this subdivision, no amount of credit 28 shall be allowed after the refundable period.
29 (5) Any refund pursuant to this subdivision shall be credited 30 against other amounts due, if any, and the balance, if any, shall be 31 paid from the Tax Relief and Refund Account and refunded to the 32 qualified taxpayer upon their election.
33 (6) An election made pursuant to this subdivision shall be 34 irrevocable and shall be made on an original, timely filed return 35 required under Part 10.2 (commencing with Section 18401) for 36 the taxable year that the credit certificate is issued in the form and 37 manner as prescribed by the Franchise Tax Board.
38 (7) A taxpayer that purchases a credit pursuant to subdivision 39 (c) cannot elect to be paid a refund pursuant to this paragraph.

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1 SEC. 5. The provisions of this act are severable. If any 2 provision of this act or its application is held invalid, that invalidity 3 shall not affect other provisions or applications that can be given 4 effect without the invalid provision or application.

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