Disney, Pixar, and DreamWorks just landed $72 million to keep animation in California
California just handed Disney, Pixar, and DreamWorks nearly $72 million in tax credits to make their next animated movies in-state, including a Shrek spinoff about Donkey and a new Disney witch movie. Here’s what’s coming, and why California is paying to keep animation at home.
California just made a major play to keep animated movies from Disney, Pixar, and DreamWorks from being made anywhere else, to the tune of nearly $72 million.
The state’s latest round of film tax credits leaned heavily on animation, and the projects it’s funding include some genuinely exciting upcoming films. Here’s what’s coming, and the bigger story behind why California is opening its wallet.
What just happened?
Let’s start with the news.
The California Film Commission announced a new round of tax credits, incentives that reduce a production’s costs to encourage filming in the state. And animation was the big winner. Four animated features from Disney, Pixar, and DreamWorks collectively landed $71.6 million, making up a remarkable 38% of the total handed out in this round.
Here’s how the money broke down among the four films:
Pixar’s untitled upcoming movie: $26.2 million (the largest of the group)
DreamWorks’ Donkey: $19.2 million
Disney’s Hexed: $18.5 million
A second, untitled DreamWorks film made up the remainder
The exciting part: what these movies are
Here’s what fans should actually be excited about.
Beyond the dollar figures, these credits give us a peek at some fun projects on the horizon:
Donkey is a spinoff from the beloved Shrek universe, centered on everyone’s favorite fast-talking sidekick. It’s part of DreamWorks doubling down on one of its most valuable franchises.
Hexed is an upcoming Disney animated film starring Hailee Steinfeld and Rashida Jones. It follows an unconventional teenager from a boring town who’s suddenly whisked away into a world of magic after discovering she’s a witch. It’s due in theaters in November 2026.
Pixar’s project remains a mystery for now, but it landing the biggest subsidy of the bunch suggests it’s a major undertaking.
For animation fans, that’s a promising slate, a new Shrek-universe story, a magical Disney adventure, and a secret Pixar film all in the pipeline.
Why is California paying for this?
Here’s the bigger picture, and it’s the real story.
For years, even though studios like Disney, Pixar, and DreamWorks are headquartered in California, a huge amount of the actual animation work has been outsourced to cheaper hubs abroad, places like Vancouver, Ireland, France, and Australia. That means California has been losing out on the jobs and economic activity that come with producing these films at home.
To fight back, the state expanded its film tax credit program to $750 million a year in 2025 and, for the first time ever, made animated films eligible. The goal is simple: give studios a financial reason to keep production, and the jobs that come with it, in California.
And it appears to be working. As DreamWorks COO Randy Lake put it, the tax credit is “a game changer, allowing DreamWorks Animation to keep production on two of our most valuable franchises in California.” He noted that Donkey might not have been based in the state at all without the incentive.
The bigger stakes for animation jobs
Here’s why this matters beyond the studios’ bottom line.
This is ultimately about people, the artists, animators, and production professionals who make these movies. Each new project funded means work for hundreds of them; this round’s projects are expected to hire nearly 2,000 cast and crew members and spend over $200 million collectively.
Disney’s Alan Bergman, chairman of Disney Entertainment Studios, framed it around that legacy: “For over a hundred years, California has been home to not only The Walt Disney Company but also an incredibly talented community of filmmakers, artists and production professionals.” Keeping animation work in the state helps sustain that community.
It’s worth noting these programs aren’t universally loved, some critics question whether large, profitable studios should receive public subsidies at all. But supporters counter that the credits generate far more in economic activity and jobs than they cost, with the state projecting billions in economic impact from the expanded program’s first year. Either way, for now, the strategy is successfully luring marquee animation home.
Disney and Pixar’s California tax credits: the bottom line
California’s latest round of film incentives is a clear win for animation fans and the industry alike. Nearly $72 million is helping ensure that upcoming films from Disney, Pixar, and DreamWorks, including a Shrek-universe spinoff and a new Disney witch adventure, are made in the state that’s been the heart of American animation for a century.
For fans, it means more of the movies we love, made by the talented communities that have always made them. And for California, it’s a bet that a little financial magic can keep the animation industry, and its thousands of jobs, right where it started. Not a bad trade for a Donkey and a witch.
Article compiled with the help of the Pirates & Princesses newsroom.
Pirates and Princesses is your destination for Disney news, theme park updates, and the pop culture you love. From Disney cruises and travel tips to Disney fashion, food, collectibles, and movie news, PNP covers it all. Visit us at piratesandprincesses.net for daily coverage. Follow PNP on Facebook and Instagram, and listen to the Pirates & Princesses podcast on Apple Podcasts and YouTube.
Hat Tips:
The Hollywood Reporter and Variety (July 2026), verified for the tax-credit breakdown (the $71.6 million to four animated features representing 38% of the round, Pixar’s untitled film at $26.2 million, DreamWorks’ Donkey at $19.2 million, Disney’s Hexed at $18.5 million, the ~$204.7 million collective spend and ~1,977 cast and crew hires), and the program’s $750 million annual expansion first making animation eligible
TheWrap and Cartoon Brew (July 2026), verified for the Hexed details (Hailee Steinfeld and Rashida Jones starring, the teen-witch premise, the November 2026 release), the context of Disney and DreamWorks outsourcing animation work to Vancouver and other hubs, DreamWorks COO Randy Lake’s “game changer” quote, and Disney Entertainment Studios chairman Alan Bergman’s statement
California Governor’s Office and Laughing Place (April-July 2026), verified for the program’s scale and rationale (the $6.6 billion projected first-year economic impact, earlier animated awardees including The Simpsons Movie 2 and Phineas and Ferb, the goal of keeping production and jobs in California, and the outsourcing of animation work to Canada, Ireland, France, and Australia)