California Budget Extends Cap on Business Tax Breaks for Three Years

California Gov. Gavin Newsom included a cap on business tax breaks in the final state budget. The cap limits breaks to $5 million or 50 percent of total tax liability, whichever is higher, and extends the existing limit for three more years.

Beginning in 2030 the cap rises to $5 million or 70 percent of tax liability. The measure is projected to save $4 billion. A bipartisan group of 39 lawmakers sent a letter to Newsom and legislative leaders last Friday requesting an exemption for the film and television tax credit program.

The Motion Picture Association and the Entertainment Union Coalition wrote that the cap would violate lawmakers’ promise to support the film industry through the tax credit program. Newsom announced this week that the program will deliver a record $6.6 billion in economic impact.

The governor’s office stated it remains “confident in the strength of the recently expanded Film and Television Tax Credit Program” and will work with industry and legislative partners.