AB 186 California Assembly · 2025-2026 Regular Session

Income taxes: film tax credits.

AB 186, titled "Budget Act of 2025," is a procedural bill that expresses the Legislature's intent to enact statutory changes related to the state's budget framework. It does not specify particular policy changes or directly affect any individuals or groups, as it serves only as a formal declaration of legislative intent. The bill functions as a preliminary step in the budget process, paving the way for future substantive legislation. This is a standard procedural measure, not a policy change itself.

Bill status passed 3 of 5 stages cleared

Introduction

Jan 2025

Committee Review

Apr 2025

Assembly Passage

Mar 2025

Senate Passage

Governor

Introduced Jan 8, 2025 Last action Aug 28, 2026

Maddy AI version diff · 2 comparisons

What changed between versions

08/28/26 - Amended Senate → AB186 · 5 edits

MODERATE

The diff shows the entire text of the Senate-amended version of AB 186 (Budget Act of 2025) being removed, with the replacement text not visible in the truncated portion of the diff. The bill concerns California film tax credits, expanding carryforward periods for motion picture credits 2.0 and 3.0 from 9 to 15 years, increasing the refundable percentage for credit 4.0 from 90% to 95%, shortening the refund payment period from 5 to 2 years, and exempting sold credits from the business credit cap starting in 2027.

Scope change

The bill's scope was expanded to exempt sold film tax credits from the business credit cap for taxable years beginning on or after January 1, 2027, and to extend the carryforward window for mid-tier film credits by 6 additional years with an active participation condition.

REQUIREMENT

Motion picture credit 2.0 and 3.0 carryforward period expanded from 9 years to 15 years, with a new 'active participant' requirement for claiming credits in years 10 through 15

FISCAL

Refundable amount under motion picture credit 4.0 increased from 90% to 95% of the total refundable amount

TIMELINE

Refund payment period for motion picture credit 4.0 shortened from 5 years to 2 years

SCOPE

For taxable years beginning on or after January 1, 2027, credits that have been sold are exempted from the $5 million business credit limitation

DEFINITION

New definition of 'active participant' added - an entity or individual with an outstanding credit allocation under Section 17053.98.1 or 23698.1 for which a credit certificate has not yet been issued, or that has been issued a credit certificate for the taxable year

01/08/25 - Introduced → 08/28/26 - Amended Senate · 5 edits · Aug 28, 2026

MODERATE

AB 186 was transformed from a placeholder bill expressing only legislative intent to enact Budget Act changes into a substantive amendment to California's motion picture tax credit system. The Senate amendment adds detailed provisions expanding carryforward periods for film credits, increasing refundable percentages, and exempting sold credits from business credit limits. This matters because it directly affects how film production companies can use and monetize their state tax credits.

Scope change

Expanded from a general placeholder expressing intent to enact Budget Act changes into specific, operative amendments to California's film tax credit statutes, with provisions taking effect immediately as an appropriation-related budget bill.

SCOPE

The bill changed from a one-line intent statement to a full set of amendments to Sections 17039.4, 17039.6, 17053.95, 17053.98, 17053.98.1, 23036.4, 23036.6, 23695, 23698, and 23698.1 of the Revenue and Taxation Code, all relating to motion picture tax credits.

REQUIREMENT

Motion picture credit 2.0 and 3.0 carryforward periods expanded from 9 years to 15 years. For years 10 through 15, the qualified taxpayer or a related company must be an 'active participant' (having an outstanding credit allocation or issued credit certificate under Section 17053.98.1 or 23698.1) to claim the carryover.

FISCAL

The total refundable amount under motion picture credit 4.0 increased from 90% to 95%, and the refund payment period shortened from 5 years to 2 years. This increases outlays from the continuously appropriated Tax Relief and Refund Account, making the bill an appropriation bill.

The bill's appropriation status changed from 'no' to 'yes' and the fiscal committee vote changed from 'no' to 'yes,' reflecting the new spending from the Tax Relief and Refund Account due to the increased refundable percentage and shorter payment period.

ELIGIBILITY

For taxable years beginning on or after January 1, 2027, credits that have been sold (under the independent film sale provisions) are exempted from the $5,000,000 business credit limit in Section 17039.4 and the 70%/$5,000,000 limit in Section 17039.6.

Floor votes · Assembly Mar 20, 2025

How they voted

52–17

Passed · 10 other

Total votes 79

Mar 20, 2025

D Democratic59

52 Yea 7

88% Yea

R Republican20

17 Nay 3

85% Nay

Vote distribution

All Yea All Nay Mixed No data

Full legislative history

Actions timeline

Total actions

Key actions

Committee

Amendments

Aug 28, 2026

Introduced

From committee chair, with author's amendments: Amend, and re-refer to committee. Read second time, amended, and re-referred to Com. on B. & F. R.

upper

Apr 2, 2025

Committee

Referred to Com. on B. & F. R.

upper

Mar 20, 2025

Lower · Passed

Read third time. Passed. Ordered to the Senate. (Ayes 53. Noes 17. Page 756.)

lower

Feb 3, 2025

Committee

Referred to Com. on BUDGET.

lower

Jan 9, 2025

Lower · Passed

From printer. May be heard in committee February 8.

lower

0 primary · 0 co-sponsors

What changed between versions

How they voted

Actions timeline

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