AB-2403 • 2026

Income tax: credits: commercial production.

Crime Education Labor Taxes Technology

Passed Legislature

This bill passed both chambers and reached final enrollment, even if later executive action is not shown here.

Sponsor: Elhawary
Last action: 2026-04-20
Official status: In committee: Set, first hearing. Referred to REV. & TAX. suspense file.
Effective date: Not listed

Plain English Breakdown

The official source does not provide specific details on performance indicators and data collection requirements, nor does it specify how many businesses will qualify for these credits.

Income Tax Credits for Commercial Production

AB-2403 allows income tax credits of up to 20% or 30% on production costs over $500,000 for businesses producing qualified commercials in California, excluding those made by AI or technologies that replace human workers.

What This Bill Does

Allows a credit against taxes imposed by the Personal Income Tax Law and Corporation Tax Law to a taxpayer who produces qualified commercials in California.
The credit is equal to 20% or 30% of production costs over $500,000 for qualified commercial productions.
Excludes any commercial created entirely by generative artificial intelligence or utilizing such technology that replaces human jobs in the production process.
Requires adherence to specified labor standards and sets an annual limit of $15 million for these credits.
Establishes a yearly application process managed by the California Film Commission starting July 1 each year.

Who It Names or Affects

Businesses that produce commercials in California
The California Film Commission

Terms To Know

Qualified Commercial Production: A commercial production meeting specific criteria, including labor standards and excluding AI-generated content.
Tax Credit: An amount subtracted from the total tax owed by a business or individual.

Limits and Unknowns

The bill only applies to taxable years beginning on or after January 1, 2027.
It is unclear how many businesses will qualify for these credits and what impact it will have on the state's budget.

Bill History

2026-04-20 California Legislative Information
In committee: Set, first hearing. Referred to REV. & TAX. suspense file.
2026-04-14 California Legislative Information
Re-referred to Com. on REV. & TAX.
2026-04-13 California Legislative Information
From committee chair, with author's amendments: Amend, and re-refer to Com. on REV. & TAX. Read second time and amended.
2026-04-13 California Legislative Information
In committee: Hearing postponed by committee.
2026-03-23 California Legislative Information
Re-referred to Com. on REV. & TAX.
2026-03-19 California Legislative Information
From committee chair, with author's amendments: Amend, and re-refer to Com. on REV. & TAX. Read second time and amended.
2026-03-19 California Legislative Information
Referred to Com. on REV. & TAX.
2026-02-21 California Legislative Information
From printer. May be heard in committee March 23.
2026-02-20 California Legislative Information
Read first time. To print.

Official Summary Text

AB 2403, as amended, Elhawary.
Income tax: credits: commercial production.
The Personal Income Tax Law and the Corporation Tax Law allow various credits against the taxes imposed by those laws, including numerous motion picture credits.
This bill, for taxable years beginning on or after January 1, 2027,
and before January 1, 2032,
would allow a credit against the taxes imposed by those laws to a qualified taxpayer that produces qualified commercials, as defined, in the state in an amount equal to 20% or 30% of the qualified production costs
in excess of $500,000 that are
attributable to the production of a qualified commercial, as specified. The bill would exclude any commercial that is created entirely
by generative artificial intelligence, as specified,
and
or that utilizes generative artificial intelligence, automated technologies, or autonomous vehicles in a manner that replaces or diminishes the job functions customarily performed by a human worker in the production. The bill
would require the qualified commercial to adhere to specified labor standards. The bill would require the California Film Commission to establish an application process and allocate the credits on or after July 1 each year, in accordance with certain requirements. The bill would limit the aggregate amount of credits that may be allocated for a fiscal year under these provisions to $15,000,000. The bill would require specified certifications under penalty of perjury. By expanding the scope of a crime, this bill would impose a state-mandated
local program.
Existing law requires any bill authorizing a new tax expenditure to contain, among other things, specific goals, purposes, and objectives that the tax expenditure will achieve, detailed performance indicators, and data collection requirements.
This bill would include additional information required for any bill authorizing a new tax expenditure.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
This
bill would take effect immediately as a tax levy.

Current Bill Text

Read the full stored bill text

Download Bill PDF