A five-year, $500m extension of California’s film and TV tax credit program has been approved in the State Assembly.

The bill now goes to the state Senate, where it may face stiffer opposition because of California’s budget crisis.

Introduced in 2009, the California tax credit was designed to turn the tide of film and TV productions lured away from Hollywood by incentives in other states such as Louisiana and New York.

The incentive is not as generous as those offered in other states - it offers a credit of between 20% and 25% on qualified production expenses made by films budgeted at no more than $75m - but it has proved popular, quickly allocating its funding of $100m each year. Films that have benefitted have included The Social Network and The Muppet Movie.

Backers of the extension bill say the incentive has resulted in $2.2bn in direct production spending, including $728m in wages, over the past three years. The incentive program is currently due to allocate its last credits in July 2012.