“Michael 2” Wins $30.8 Million California Tax Credit as Lionsgate Prepares Sequel

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By Mockulus Editorial
October 20, 2026

Lionsgate’s sequel to “Michael” has been approved for a $30.8 million California production tax credit, one of the most concrete signs yet that the follow-up is moving toward cameras. The California Film Commission announced the allocation in early October as part of a round covering 35 films and $226 million in incentives, according to Variety and the Los Angeles Times.

What the Credit Is, and Isn’t

The $30.8 million is a state incentive, not the sequel’s budget and not money already spent. FanBolt notes that California film credits are neither grants nor loans, and that they aren’t paid out until a film is delivered and audited. Lionsgate has not disclosed a budget for the sequel, and the award doesn’t mean principal photography has begun. It was the second-largest individual allocation in the round, behind $40.1 million for an untitled Pixar film.

A Bigger Credit Than the First Film

The first “Michael” received roughly $21 million in California credits, at a time when its approximately $120 million in qualified in-state spending was the largest of any project in the program’s history, according to Fiction Horizon. California has since expanded the program. Under the newer version that took effect in July 2025, studio features can receive a 35 percent credit on qualified in-state costs, double the 17.5 percent rate the first film received.

FanBolt estimates that a $30.8 million credit at that rate implies close to $88 million in qualified California spending. That figure is arithmetic, not a reported budget, since the credit covers only certain in-state costs such as crew wages and stage rentals.

Where the Sequel Stands

Lionsgate has said a second film is in development. Studio film chief Adam Fogelson said earlier this year that roughly 25 to 30 percent of a sequel had effectively been shot during the original production, including several major musical sequences, and that some material cut from the first film could appear in it. Decked Out Magazine reports that the program’s rules typically require production to start within 180 days of an award, extended to 240 days for larger-budget films. By that rule, the sequel would need to begin shooting by around mid-2027 to keep the credit.

In August, Fogelson said the studio was targeting a production start around the end of this year or early next year, and a release between late 2027 and early 2028. Nothing has been formally dated, and John Logan, who wrote the first film, was previously reported to be working on the script.

What Hasn’t Been Announced

Lionsgate hasn’t said which period of MJ’s life the sequel will cover. The first film concluded during the Bad era, so later years are a natural next step, but any specifics about story, scope and cast remain unconfirmed. Fogelson has said he wants a big, satisfying film, and Prince Jackson has said the family will not rush a sequel, but neither has described what it will contain.

Why It Matters

For Lionsgate, the credit is a practical step: it commits the production to filming in California and reduces its qualified costs. For fans, it is the clearest sign yet that a second film is moving forward after the first grossed $1.028 billion. The next markers to watch are a firm start date, casting news and an official release date.

Source; California Film Commission allocation announcement, via Variety, Fiction Horizon, Decked Out Magazine and ComingSoon and Netflix Junkie