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 Bill Text - AB-1377 Income taxes: credits: motion picture credit.

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 |Add To My Favorites |Track Bill | Version: 02/21/25 - Introduced

 AB-1377 Income taxes: credits: motion picture credit.(2025-2026)

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 Date Published: 02/21/2025 09:00 PM

AB1377:v99#DOCUMENTBill Start

 CALIFORNIA LEGISLATURE—
 2025–2026 REGULAR SESSION

 Assembly Bill

No. 1377

Introduced by Assembly Member McKinnor
(Coauthors: Assembly Members Flora, Ortega, and Celeste Rodriguez)
(Coauthor: Senator Smallwood-Cuevas)

February 21, 2025

 An act to amend Sections 17053.98, 17053.98.1, 23698, and 23698.1 of the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy. 

LEGISLATIVE COUNSEL'S DIGEST

AB 1377, as introduced, McKinnor.
 Income taxes: credits: motion picture credit.

The Personal Income Tax Law and the Corporation Tax Law allow various credits against the taxes imposed by those laws, including numerous motion picture credits. 

Existing law, for taxable years beginning on or after January 1, 2025, allows a motion picture credit (motion picture credit 4.0) to be allocated by the California Film Commission on or after July 1, 2025, and before July 1, 2030, 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 requires the California Film Commission to certify a credit amount equal to 96 percent of the total credit allocated to a qualified taxpayer, unless the qualified taxpayer chooses to submit a diversity workplan
 and the California Film Commission determines that the qualified taxpayer has met or made a good-faith effort to meet the diversity goals in its diversity workplan, as specified. 

This bill, for motion picture credit 4.0, if a qualified taxpayer chooses to submit a diversity workplan, would remove the good faith effort standard, and instead would require the California Film Commission to determine whether the qualified taxpayer met the diversity goals in its diversity workplan, as provided. The bill would also correct erroneous cross-references in those provisions. 

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. Existing law defines a
 qualified motion picture for these purposes in the same manner as the motion picture credit and additionally requires that the qualified motion picture provide a diversity workplan that is approved by the commission. Existing law requires the California Film Commission to increase a qualified motion picture applicant’s credit percentage by 4 percentage points if the applicant has met or made a good faith effort to meet the diversity goals in its diversity workplan. 

This bill, for taxable years beginning on or after January 1, 2025, would remove the good faith effort standard, and instead would allow the California Film Commission to increase a qualified motion picture applicant’s credit percentage by 4 percentage points if the applicant has met the diversity goals in its diversity workplan. 

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 2/3 of the membership of each house of the Legislature.

This bill would take effect immediately as a tax levy.

Digest Key

 Vote:
 2/3 
 Appropriation:
 NO 
 Fiscal Committee:
 YES 
 Local Program:
 NO 

Bill Text

The people of the State of California do enact as follows:

SECTION 1.

 Section 17053.98 of the Revenue and Taxation Code is amended to read:

17053.98.

 (a) (1) For taxable years beginning on or after January 1, 2020, there shall be allowed to a qualified taxpayer a credit against the “net tax,” as defined in Section 17039, subject to a computation and ranking by the California Film Commission in subdivision (g) and the allocation amount categories described in subdivision (i), in an amount equal to 20 percent or 25 percent, whichever is the applicable credit percenta