Exploring Future Film Production: Tax Incentives and Challenges in Los Angeles

Hollywood sign on hillside with trees in foreground.

Los Angeles faces an alarming 22.4% drop in film production while industry leaders warn the entertainment capital could become “the next Detroit” without substantial tax incentives to keep productions from fleeing to other states.

Key Takeaways

Hollywood insiders warn Los Angeles risks becoming “the next Detroit” without immediate tax relief incentives to compete with other states.
On-location production in Los Angeles decreased by 22.4% in Q1 2025 compared to the same period last year, with television production down 30.5%.
Governor Gavin Newsom proposed increasing California’s film incentives from $330 million to $750 million to combat the exodus.
The proposed SB630 bill aims to boost tax credits to 35% of qualified expenditures and expand qualifying productions.
High housing costs in Los Angeles are driving middle-class entertainment workers out of the city, compounding the industry crisis.

Hollywood’s Alarming Production Decline

Film and television production in Los Angeles has plummeted to concerning levels, with the first quarter of 2025 showing a 22.4% decrease compared to the same period last year. According to FilmLA reports, from January to March, shoot days totaled just 5,295, reflecting a dramatic reduction across multiple sectors. Television production suffered the most significant hit with a 30.5% decrease, while feature film production fell by 28.9%. These numbers represent not just a year-over-year decline but a substantial drop from the industry’s five-year average, signaling a potential long-term shift away from Hollywood’s traditional production center.

The decline follows a period of industry turbulence, including the pandemic and labor disputes. However, industry analysts note that production has not rebounded as expected after the resolution of writers’ and actors’ strikes. Instead, major studios have reduced content spending while increasingly looking to other regions with more favorable tax incentives. Only 13 TV pilots were shot in Los Angeles last quarter, the lowest number ever recorded by FilmLA, highlighting how even development work is migrating elsewhere.

The Exodus of Entertainment

California’s position as the entertainment industry hub faces unprecedented challenges from competing states like Georgia and New York, which offer substantial tax incentives that can cover up to 35% of production costs. This economic advantage has drawn numerous productions away from Los Angeles, creating a snowball effect as industry infrastructure develops in these alternative locations. The exodus isn’t limited to productions—celebrities and industry professionals are increasingly relocating to states like Texas and Florida, where lower taxes and housing costs provide financial relief from California’s high cost of living.

“This is not hyperbole to say that if we don’t act, the California film and TV industry will become the next Detroit auto,” warned Noelle Stehman at a recent town hall focused on addressing the crisis. – Source

The decline has widespread implications beyond Hollywood executives. State Senator Ben Allen emphasized at the April 14 town hall: “The studios don’t care where they do the work. They’ll do it anywhere. They’re still producing shows. What a lot of our colleagues simply don’t understand is that this is a middle-class problem. The studio heads are going to bed in Bel-Air no matter what.” This highlights how the production exodus disproportionately impacts middle-class workers who form the backbone of the industry.

Proposed Solutions and Economic Impact

In response to the crisis, California officials are working on solutions to revitalize the local entertainment industry. Governor Gavin Newsom has proposed more than doubling the state’s film incentives from $330 million to $750 million annually. Meanwhile, the proposed SB630 bill aims to boost tax credits to cover 35% of qualified expenditures and expand the types of productions that qualify, including half-hour TV comedies which are currently ineligible despite being a traditional Los Angeles production staple.

“This is not a tax giveaway. This is a job program that is keeping people in their homes, keeping people off the unemployment rolls. If we don’t do this, it’s going to cost a lot, lot more than these tax credits are costing us,” argued state Assemblyman Rick Zbur at the recent town hall. – Source

Proponents of enhanced tax incentives point to the multiplier effect of film production, which creates work for countless supporting businesses from catering companies to equipment rentals. FilmLA spokesman Philip Sokoloski warned that “California can’t afford to surrender any more work to its competitors.” The decline has already impacted soundstage occupancy, which fell to 63% last year from 69% in 2023, indicating fewer productions are utilizing Los Angeles infrastructure even when available.