Animation Surfacing as Big Winner in California Film and TV Tax Credit

Animated productions are emerging as a force in California’s film and TV tax credit program.

Four animated titles from Disney, DreamWorks and Pixar nabbed $71.6 million to shoot in the state, the California Film Commission announced on Tuesday. The figure accounts for more than 38 percent of the estimated $186.6 million handed out to 41 new movies selected to receive tax credits. Collectively, they’ll spend roughly $204.7 million and hire 1,977 cast and crewmembers.

This round of incentives marks one year since major changes to the program spurred by a plunge in shooting levels were implemented. It appears Los Angeles is starting to see the impact of the expansion, with production in the region trending upward. Among the changes: expanding the eligible categories of production to include animation.

The overhaul may prove to be a boon for DreamWorks, which was selected to receive $19 million for Shrek prequel Donkey. It also got $7.8 million for a second untitled film.

If not for the subsidy, production for Donkey may not have been based in the state, DreamWorks COO Randy Lake said. “The California Film Commission’s tax credit is a game changer, allowing DreamWorks Animation to keep production on two of our most valuable franchises in California,” Lake explained.

Also headlining the animated movies in this allotment is Disney’s Hexed ($18.5 million). The film, which stars Hailee Steinfeld and Rashida Jones, follows an unconventional teenager from a boring town who accidentally finds herself whisked away to a world of magic after discovering she’s a witch.

Of the four animated features, Pixar got the biggest subsidy to create a yet-to-be-titled movie ($26.2 million) in California. In total, production entities owned by Disney nabbed $44.2 million for two films, a tidy sum for projects the studio may have elected to make in California regardless of the tax credit.

Major animated movies are emerging as near shoe-ins to participate in the California film and TV tax credit program, which prioritizes qualified spending and jobs creation. They easily satisfy requirements that titles incur 75 percent of their budgets in the state because they mostly rely on postproduction work and voice recording facilities, among other things, rather than on-location shooting. That means most of their spending is naturally generated in California, making it easier to meet the threshold.

The jobs ratio used to select productions also favors animation since the category is often more labor-intensive than live-action, generating higher below-the-line spending relative to the total production budget. Family Guy spinoff Stewie and Dan Harmon’s President Curtis have already been tapped to get subsidies.

Also included in this allotment of incentives: Artist Equity’s Gingerbread Man ($7 million) and untitled movies from Disney’s 20th Century Studios ($8.2 million) and Warner Bros. ($42 million!).

In total, the 41 movies are expected to generate $544 in qualified expenditures, according to the film commission.

“California has long set the standard for entertainment production, creating good-paying jobs and showcasing the creativity and innovation that define the Golden State,” said Gov. Gavin Newsom in a statement. “The first year of the expanded tax credit program is already delivering results – generating billions in economic activity, creating opportunities for businesses and the workforce, and bringing more productions home to California.”

Added California Film Commission director Colleen Bell, “From major studio features and independent films to animated projects, the diversity of productions choosing California speaks to the strength of our industry and the unmatched talent, infrastructure, and creative ecosystem that exist here.”

After filming levels hit a new nadir last year, L.A. saw a roughly 10 percent increase in shoot days to start 2026 compared to the three month period from October to December, according to the latest report from permitting office FilmLA. Features saw a major uptick in production, logging a 52 percent year-over-year increase thanks, in part, to nearly a quarter of all filming in the category coming from titles receiving subsidies to shoot in the state.

The full list of projects included in this round of California’s film and TV tax credit program is below: