Income taxes: credits: motion picture credit.

Assembly Member McKinnor, alongside a bipartisan group of co-authors, proposes significant changes to California's motion picture tax credit program that would strengthen diversity requirements for film and television productions seeking state tax incentives. The legislation modifies how production companies qualify for additional tax credits by eliminating the current "good faith effort" standard for meeting diversity goals.

Under the proposed changes, production companies must demonstrate actual achievement of their stated diversity objectives to receive the full tax credit allocation. The California Film Commission would evaluate whether productions have met specific diversity targets in their workforce composition and creative roles, rather than accepting evidence of attempted compliance. This represents a shift from the existing framework, which allows productions to qualify for additional credits by showing they made reasonable attempts to achieve diversity goals.

The bill maintains the program's core structure of providing tax credits worth up to 25% of qualified production expenses, with the base credit rate at 20% for most productions. Productions can still earn an additional 4% credit by meeting diversity targets, but would need to show concrete results rather than just documented efforts. The legislation preserves other existing incentives, including bonuses for filming outside the Los Angeles area and for visual effects work performed in California.

To support industry-wide diversity initiatives, the bill continues requiring productions to pay into a Career Pathways Training Program, with fees set at 0.5% of the approved credit amount for standard productions and 0.25% for independent films. This program provides technical skills training to individuals from underserved communities seeking to enter the film and television industry.

The changes would take effect for taxable years beginning on or after January 1, 2025, giving the industry time to adjust hiring and recruitment practices to meet the new standards. The California Film Commission would maintain oversight of the program, with expanded responsibilities for verifying diversity compliance and reporting outcomes to the Legislature.