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California legislators have introduced a new bill that could incentivize more animation production in the state.
The bill — Senate Bill 630 — would extend a 35% tax credit to animated features, series, or shorts that are produced in California, with a minimum production budget of $1 million. Most previous film and tv credits in the state only applied to live-action productions.
The inclusion of animation in the new bill comes at an opportune time. The state’s new bill not only increases the credit from its current 20-25%, but also expands the cap on the credit program from $330 million to $750 million annually.
In recent years, animation production has increasingly shifted away from the United States. Both Walt Disney Animation Studios and Dreamworks Animation no longer make their animated features exclusively in California, leaving Pixar as the sole animation studio that does end-to-end feature animation production exclusively in the Golden State.
With rare exceptions, series animation production hasn’t been done in California for decades except for front-end pre-production and back-end post, with much of the actual production being done in Canada, Asia, Europe, and Latin America. Many overseas countries provide generous subsidies for animation production, as do states like Georgia, where some animation production has shifted.
It’s unlikely that the bill will significantly change how Hollywood currently produces animation, but it could potentially encourage more projects to be greenlit and help end the industry’s current standstill.
The bill, which is currently being debated in the California congress, is expected to pass, but the state’s 2025-2026 budget is still being negotiated and it remains to be seen whether the $750 million cap will be approved.
Overall film production in Los Angeles was down 30% in 2024 over five-year averages.
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