The move comes as an effort to keep existing production companies in Los Angeles and to attract smaller filmmakers.
The council increased the Entertainment Adjustment Cap from $2.5 million to $5 million, opening an opportunity for nearly all adult films that have significantly smaller budgets than the cap allows.
Under the new incentive, a producer would be required to pay a flat tax of only $145 for a film that costs less than $5 million. If it exceeded that amount the tax would be $1.30 per $1,000 capped at $9,245 rather than paying on a sliding scale that could reach up to $12,495 under the old tax.
Councilman Richard Alarcón, who authored the proposal, said the incentive could bring in as many as 535 new production companies.
"The fact is a lot of other states are dropping their incentives because they don't have the labor pool that Los Angeles has," Alarcón said. "If we do nothing, these other jurisdictions will be able to compete to get our business."
Mayor Antonio Villaraigosa is expected to sign the measure that would take effect in 30 days.
