California Film Production Faces Challenges Despite New Tax Incentives

As the film and TV industry continues to evolve, California is taking significant steps to retain its status as the premier hub for production. In July, Governor Gavin Newsom signed legislation that doubled the annual tax incentives for film and television projects in the state, increasing the allocation from $330 million to an impressive $750 million. This move was aimed at curbing “runaway production,” where film projects move to locations with more favorable tax incentives.

Declining Production in California

Despite this ambitious effort, recent statistics reveal troubling trends. The fourth quarter of 2025 saw a 20% decline in movie and TV projects filmed in California, alongside a 22% drop in production spending. According to a report by industry tracker ProdPro, total production spending in California for that quarter amounted to $1.35 billion.

Though California remains a favorite destination for major studios, these substantial declines—even after the launch of enhanced tax incentives—serve as a warning. Interestingly, the Los Angeles area did experience a slight uptick, with overall filming days increasing by about 6% from the previous quarter. However, the total number of shoot days in L.A. dropped by 16% compared to 2024.

Future Projects and Economic Forecast

FilmLA’s vice president, Philip Sokoloski, remains optimistic, indicating that numerous incentivized projects are still in the pipeline. The California Film Commission recently announced a list of 28 titles slated for production, which includes contributions from major players like NBCUniversal, Sony, Amazon, and Apple. Collectively, these projects are expected to generate around $562 million in economic activity.

Growing Competition from New York and Other States

While California is grappling with stagnation, its rival, New York, is experiencing significant growth. The state reported a 31% increase in filming counts and a 23% rise in production spending year-over-year. Total spending in New York reached $1.07 billion in Q4 of 2025, positioning it close to surpassing California’s production figures.

Two other states, New Jersey and Illinois, are emerging as noteworthy competitors. New Jersey’s filming count soared by 75%, along with a 12% growth in production spending. This success follows the state’s robust $430 million annual tax incentive program. Notably, New Jersey is gearing up for even more production activity, as Netflix invests $1 billion to build a new East Coast facility with a dozen soundstages.

Meanwhile, Illinois also made headlines with a 70% increase in film counts and a 46% increase in spending during the same quarter. This growth is likely influenced by the popularity of local shows like NBC’s Chicago Fire and FX’s The Bear.

The Larger Picture of U.S. Film Production

On a national level, the film and television industry saw a 4% decline in total production during Q4, with an 8% decrease in spending, dropping to $4.2 billion. This downturn underscores a trend where filmmakers are increasingly seeking productions abroad to capitalize on better incentives. Notably, both the United Kingdom and Canada experienced double-digit growth in filming counts and expenditures during the fourth quarter.

Conclusion

As the landscape of film production continues to evolve, California must adapt and explore new strategies to retain its status as the premier filming location. With emerging competitors gaining ground and overall U.S. production figures declining, the future may require California to reassess its approach to attract and maintain film and television projects.

For more insights and statistics, check out ProdPro’s detailed reporting.