California, hailed as the global epicenter of filmmaking, has taken a major step to retain its dominant position in the industry by allocating $750 million annually in tax credits for film production. Launched July 1 under the California Film Commission’s version 4.0 tax credit program, this significant investment underscores the state’s commitment to keep film shoots—and the jobs they generate—within its borders. However, amid the enthusiasm surrounding this new funding, a crucial sector of filmmakers—independent filmmakers with budgets under $1 million—is notably excluded from meaningful support, putting California’s future creative pipeline at risk.

The Tax Credit Divide: Big Budgets Get the Spotlight

The $750 million annual tax credit program primarily serves large-scale productions with towering budgets. Approximately 5% of the credits are reserved for independent films with budgets above $10 million, while another 5% target independent films with budgets below $10 million. However, the program’s minimum budget threshold of $1 million effectively excludes most low-budget independent filmmakers. This group, which includes the vast majority of indie creators, receives no tax credit benefit, making it financially difficult for them to produce in California.

Jeff Deverett, an independent filmmaker and professor at San Diego State University and UCLA Extension, passionately highlights this gap: “Most of the films I make are under $1 million. There is no credit for them. I’m forced to look elsewhere, despite California being the best place in the world to shoot movies.” He calls low-budget indie films the “small business” of the film industry, driving innovation, storytelling diversity, and the nurturing of future industry talent.

Why Low-Budget Indie Films Matter

While big-budget Hollywood blockbusters dominate headlines and box office charts, indie films form the foundational bedrock of the industry’s creative ecosystem. These smaller films are often where emerging filmmakers begin their careers, experimenting with narratives free from studio constraints. Indie films champion diverse storytelling, cultural exploration, and unique perspectives often missing in mainstream cinema.

“These indie films are the breeding ground for storytellers,” Deverett explains. “You’re not born a big-budget filmmaker. You start small, telling the stories that matter to you, and many of these stories are fantastic, even if they lack big production values.” This creative freedom often leads to innovation, new talent discovery, and vital cultural contributions.

The Financial and Logistical Hurdles

Without tax credits, California’s indie filmmakers face steep financial challenges. Neighboring states and countries like New Mexico, Louisiana, Kentucky, Oklahoma, and Canada actively lure filmmakers with attractive incentive packages—some offering up to 35% tax rebates—that stretch budgets further, making it economically prudent to shoot outside California.

Deverett recounts his own experience: “I’ve made nine films—only two in California. I forfeited roughly $170,000 in tax incentives just to be home for my kids during shooting, which cost me significantly. That money for a small filmmaker is huge—it can mean the difference between making another film or not.”

Tax credits also come with administrative complexities. Large studios have entire departments dedicated to managing such details, while indie filmmakers often must navigate a complicated system without dedicated resources, making access and application for credits even more daunting.

High Attrition and Distribution Challenges

The indie film world is rough terrain. An estimated 10,000 feature-length indie films are made yearly in the U.S., but only about 1% break even financially. Reasons include poor production quality for many, lack of access to distribution channels, and almost complete absence of marketing budgets to promote films on crowded streaming platforms dominated by familiar Hollywood titles.

“Making the film is the easiest part. Distributing and marketing it—that’s where the challenge really lies,” Deverett says. Without marketing and distribution know-how or funds, many quality indie films never reach an audience despite their creativity and potential impact.

Legislative Efforts to Bridge the Gap

Recognizing this void, Deverett has championed legislative efforts to create financial incentives tailored for low-budget indie films. California Assembly Bill 1421 proposed a separate $50 million fund over three years to support films under the $1 million budget mark. The bill passed initial committee stages but was ultimately halted in appropriations due to competing state priorities like housing and homelessness, especially in the pandemic’s aftermath.

“This pilot program could fund around 100 films per year while providing paid internship opportunities for film students,” explains Deverett. “It’s a small ask compared to the overall film tax credit expenditure but could keep tens of thousands of filmmakers in California.”

The Heartbeat of California Filmmaking

Despite the hurdles, California, especially places like San Diego, retains unmatched natural environments, infrastructure, and talent pools for filmmaking. Deverett is clear: “I love being a Californian. The weather, the lifestyle, everything about it is perfect for filming. The problem is the lack of financial incentives for indie filmmakers.”

As California seeks to maintain its film industry leadership amid fierce national and international competition, it must reckon with the crucial role low-budget independent filmmakers play. Supporting them via inclusive tax incentives bolsters not just economic activity, but the cultural, artistic, and innovative heartbeat of the industry.

Conclusion

California’s $750 million film tax credit program marks a vital investment in the state’s filmmaking future, but its exclusion of low-budget indie productions disregards a critical segment essential for the creative and economic sustainability of the industry. Legislative and community efforts to extend financial support to these filmmakers are necessary to preserve California’s role as a nurturing ground for storytellers and innovators.