Throughout the 2026 legislative session, AICP maintained a strong presence in Sacramento, advocating for policies that recognize the economic importance of commercial production and strengthen California's position as a production center. Working with legislators, industry partners and labor organizations, AICP testified before legislative committees, engaged directly with policymakers and built support for a dedicated commercial production tax incentive.
The 2026 legislative session has now come to a close with mixed results for the entertainment industry.
For commercial production, the outcome was, ultimately, disappointing. Assembly Bill (AB) 2403, which would have established California's first dedicated tax credit for commercial production, was held in the Senate Appropriations Committee and will not advance this year. At the same time, the Legislature approved a new standalone post-production incentive and enacted amendments to mitigate some of the impact of new business tax-credit limitations contained in Senate Bill (SB) 122.
AB 2403: Commercial Production Credit Falls Short
AICP's principal legislative priority in Sacramento this year was AB 2403 (Elhawary), legislation designed to bring commercial production work back to California by establishing a dedicated state tax credit for qualified commercial productions.
AB 2403 would have provided a 20% credit for qualified production costs within the Los Angeles Studio Zone and a 30% credit for qualified costs outside the Zone, with an annual program cap of $15 million.
AB 2403 passed the Assembly by an overwhelming 70–3 vote and subsequently cleared the Senate Revenue and Taxation and Public Safety Committees. On August 13, however, the Senate Appropriations Committee held the bill under submission, effectively ending its momentum for the 2026 session.
The outcome is particularly disappointing given the strong bipartisan and industry support for the measure and the continued challenges facing California's commercial production sector. AB 2403 was designed as a targeted program separate from the existing Film and Television Tax Credit Program and would have addressed a category of production that remains excluded from California's production incentive programs.
AB 2319: A New Incentive for Post-Production
The session did advance a priority for California's post-production industry.
AB 2319 (Schultz) passed both houses of the Legislature and would establish California's first standalone post-production tax credit for film and television productions. The legislation is designed to encourage editing, sound, visual effects, scoring and other post-production work to remain in California.
The credit would range from 35% to 50% of qualified California post-production expenditures, depending on applicable provisions and uplifts. Unlike the existing Film and Television Tax Credit Program, the new incentive would not require the production's principal photography or overall budget to meet California-based thresholds for the post-production work to qualify.
Although advocates initially sought $100 million in funding, the Legislature's end-of-session budget proposal sets aside $10 million of initial funding, should the Governor sign the bill into law.
SB 122 and the Film Tax Credit Cap
Another industry issue this year was SB 122, the budget trailer bill that extended California's $5 million annual limitation on the use of business tax credits. The legislation was enacted as part of the 2026–27 state budget.
The film and television industry was concerned that the limitation would apply to California film and television tax credits, which could delay a studio's ability to realize the full value of credits it may have earned.
The Legislature ultimately responded with SB 186, a budget trailer bill that provides targeted changes to the film tax-credit program. Among other provisions, SB 186 exempts film tax credits allocated to independent films from the temporary business-credit limitations adopted through SB 122.
Looking Ahead
The 2026 legislative session demonstrated both the opportunities and challenges facing California's production industry.
For AICP, the message remains clear: California must compete for the full spectrum of commercial and entertainment production work. Commercials represent a significant source of employment for California's production workforce, but they remain outside of the state's existing production incentive structure.
AICP appreciates the legislators, labor organizations, production companies and industry partners who supported AB 2403 throughout the session. We will continue working in Sacramento to make the case for the commercial production sector and to ensure that California's policies recognize the economic value of commercial production alongside film and television.
For questions or concerns about government and public affairs, contact David Michael González, VP, Labor Relations & External Affairs, at davidg@aicp.com.