Los Angeles logged 4,711 on-location shoot days in the second quarter of 2026, down 12.7% from a year earlier and the weakest quarter of the industry’s recovery so far. The count comes from FilmLA, the nonprofit clearinghouse that issues location permits across most of the region. It landed just weeks after California closed the books on the first full year of its biggest ever swing at fixing this exact problem, a film and television tax credit more than doubled to $750 million a year and made fully refundable for the first time.
The wager is drawing applications. It has not yet drawn back the cameras.
LA’s Worst Quarter Yet
FilmLA’s second quarter report, covered by TheWrap, Deadline and Variety among others, put on-location production 36% below the five-year average for the period, the benchmark studios and city officials use because it smooths out the pandemic-era swings of 2020 and 2021.
The declines were not even across categories.
- 443 feature film shoot days, down nearly 20% from the second quarter of 2025, with independent titles making up most of what actually filmed
- 676 reality TV shoot days, down almost 40% year over year and the steepest slide of any category tracked
- 543 commercial shoot days, down 21.5% as advertisers keep chasing cheaper crews outside the state
- 1,607 scripted television shoot days, up 34% from the first quarter, the one category moving the right direction
Television dramas specifically were down just 6.4% from a year earlier and up 55% from the first quarter. Scripted work, the category most directly tied to the state’s new incentive, is turning first while everything built on cheaper, faster turnarounds keeps shrinking.
California Bets $750 Million on a Turnaround
Governor Gavin Newsom’s expanded California Film and Television Tax Credit Program, known in the industry as Program 4.0, took effect for the fiscal year that ran from July 2025 through June 2026. It raised the base credit from a range of 20% to 25% up to 35% to 40% of qualified spending, more than doubled the annual funding cap, and for the first time made the credit fully refundable, meaning a studio can collect cash back from the state even when its California tax bill is smaller than the credit it earned.
| Program Feature | Program 3.0 (Through Mid-2025) | Program 4.0 (Current) |
|---|---|---|
| Annual funding cap | $330 million | $750 million |
| Base credit rate | 20% to 25% | 35% to 40% |
| Refundability | Credit only, no cash refund | Fully refundable |
| Applications, year one | Baseline | Up 400% |
The governor’s office frames the redesign around below-the-line jobs and investment rooted in California, language written into the program after years of runaway-production complaints. The California Film Commission says the redesign funded 170 projects in its first full fiscal year, worth a combined $6.6 billion in direct production spending, with the newest batch of new film projects announced this July.
A Billion-Dollar Box Office Skips the Backlots
The irony is that 2026 has been a strong year at the box office. “The Odyssey” delivered the hit everyone expected, but two smaller films did the real surprising, New York Post film critic Johnny Oleksinski wrote.
“Michael,” the Michael Jackson biopic starring the singer’s nephew Jaafar Jackson, crossed $1 billion worldwide this year, the first biopic ever to do it. Variety confirmed the film pulled in $629.8 million overseas and $371.8 million domestically, enough to pass “Oppenheimer” as the highest-grossing biopic on record. “Obsession,” a horror film Curry Barker directed on a budget the Post reported at under $1 million, opened to $16 million and had grossed $148 million worldwide by mid-May, a startling return against its cost. Barker built the shorts-to-studio pipeline that led to the film well before that opening weekend.
These three hits did not need a single day of Los Angeles shooting to reach that scale. Los Angeles Mayor Karen Bass took a different message from the same FilmLA report.
FilmLA’s quarterly report is proof that incentives are working: local incentivized productions are on the rise, creating good-paying union jobs and realizing economic opportunity for Angelenos.
Bass said in a statement responding to the release. Variety’s own headline on the identical numbers read “L.A. Production Shows No Sign of a Rebound Yet.” FilmLA itself takes the more measured line, crediting job opportunities tied to scripted production credits even as its own on-location count keeps falling.
Every Rival State Wants What LA Used to Have
California is competing against a growing list of governments willing to underwrite a shoot for the jobs and spending it brings.
- Georgia offers a 30% transferable credit, 40% with an in-credits logo, carries no annual cap, and pulled in roughly $4.2 billion in production spending in a single recent year
- New York extended its post-production tax credit through 2036 and opened a 2026 application window for a $100 million independent film program
- The United Kingdom offers a 29.25% credit that increasingly pulls visual effects work away from California crews
- Ireland offers up to 40% on qualifying post-production spending for smaller budget films
Entertainment Partners, a production payroll and finance firm, tracks these state-by-state tax incentive comparisons every year, and California’s jump to $750 million was built specifically to answer them.
The Union Math Behind the Empty Backlots
The New York Post’s editorial board argued last week that union rules make Los Angeles shoots needlessly slow and expensive, and that the industry stays quiet about it for political reasons. The picture on the ground is more complicated.
Hollywood’s unions are shrinking along with the work. Roughly 25,000 industry jobs disappeared in what crews now call the great contraction, the wave of cost cutting that followed the 2023 writers and actors strikes.
The same unions have still won real gains. IATSE is Hollywood’s largest behind-the-camera union, formally the International Alliance of Theatrical Stage Employees. In 2024 it secured a 14.5% wage increase matching what SAG-AFTRA won for actors, protections against being replaced by artificial intelligence, roughly $700 million in new streaming residuals earmarked for health and pension funding, and expanded overtime rules.
Program 4.0 was written with this exact tension in mind, which is why its below-the-line job language exists at all. The pandemic era offered an earlier preview of how fast a Hollywood budget can spiral once a production leaves its planned track, as films that overran by hundreds of millions during COVID showed.
Will California’s Film Bet Pay Off by Fall?
Probably not by then, but the direction should be visible. FilmLA’s third quarter count, due around October, will be the first to fully reflect productions that only recently finished Program 4.0 certification, since winners typically need months to staff up, book stages and secure permits before a single shoot day counts toward the public tally.
The early signal is scripted television, up 34% from the first quarter with dramas alone up 55% over the same span. That momentum has not yet reached feature films, still down close to 20% year over year, and the next quarterly report is the first real test of whether it does.
California just finished the most expensive year of film incentives in its history and has a record number of approved projects to show for it. The shoot days those projects are supposed to produce have not arrived yet, and the count due this October will say whether the wait was worth it.
Frequently Asked Questions
Why did LA production keep falling right after California’s tax credit got bigger?
Because a tax credit is a promise of money once a production wraps, not a start date for cameras. Most winners spend months lining up stages, crews and permits before a single shoot day counts, so a credit certified in late 2025 may not show up in FilmLA’s tally until sometime in 2026 or later.
What is the difference between a FilmLA shoot day and a soundstage production day?
FilmLA only counts permitted, on-location filming on streets, parks, private lots and other public-facing sites. A production working entirely inside a studio’s own soundstages, which describes most large-scale scripted shows, can be fully staffed and shooting every day without adding a single day to FilmLA’s public count.
What does it mean for a film tax credit to be fully refundable?
Under the old program, California could only let a production offset its own state tax bill, which did little for companies with small California tax liability. Under Program 4.0, if the credit is worth more than a company owes in state taxes, California pays the difference in cash, part of why applications jumped 400% in the program’s first year.
Do a movie’s box office numbers say anything about where it filmed?
Not directly. Global grosses like the billion dollars “Michael” pulled in reflect ticket sales everywhere the film played, not where the cameras rolled. A hit can be shot almost entirely outside Los Angeles and still be marketed and reviewed as a Hollywood movie, part of why a strong box office year has not translated into more local shoot days.
What is happening to Hollywood’s union crews while shoot days fall?
Membership itself is shrinking. In recent weeks, thousands of IATSE members have been flagged for removal from the union’s Industry Experience Roster for not holding a union job since 2023, a sign the production slowdown is now thinning the union rolls it once guaranteed steady work through.
