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Gaming Tax Credits: A Developer's Guide to Free Money

Gaming Tax Credits: A Developer's Guide to Free Money

Fri 24 May 2013 2:28pm GMT / 10:28am EDT / 7:28am PDT
Development

Government give-backs aren't limited to Montreal. Here are dozens of North American programs for developers, from Puerto Rico to PEI

As TV infomercial star and Riddler-inspired fashionista Matthew Lesko would say, "The government is giving away FREE MONEY to game developers!" Or to put it less colorfully but more accurately, there are dozens of government programs in the United States and Canada offering tax credits and rebates for companies producing video games.

With the help of the Entertainment Software Association and Pricewaterhouse Coopers, GamesIndustry International compiled the below list of 28 tax incentive programs that developers can take advantage of to bolster their bottom lines. We've tried to include the broad strokes benefits and restrictions on these programs, but many of the incentives were too complex to concisely recap in this space. For that reason, we've also done our best to provide links to government websites and the agencies overseeing the programs.

As with anything approaching a free lunch (or a tax-deductible one, for that matter), there are usually strings attached. Most payroll tax credits and rebates only cover wages paid to residents, with non-resident pay being incentivized at a reduced rate, or not at all. There are similar restrictions on what production expenses can qualify for these programs, with some programs stipulating that projects purchase whatever they need locally whenever possible.

Then there are limits on the size of the projects that can be funded. Some incentives are designed for games with huge teams and long development times; others were intended to support much smaller projects. Many of the programs were actually designed for TV and movie production, and have been expanded to cover digital media projects as well. Some states also offer sales tax exemption for certain production expenses, or have different rules on when companies can actually claim benefits.

The point is, there's a lot more to consider when assessing the value and suitability of these programs than just the information provided below. For instance, Puerto Rico's 40 percent tax credit on income and production costs tops even Quebec's incentive offerings, but there's no comparison between the two talent pools developers would have access to. Reliability is also a key factor; Quebec has offered its incentives for years, showing a long-term commitment to supporting the gaming industry within its borders. And while we don't want to question Puerto Rico's commitment to its own program, it's recent enough that it has yet to assist a single developer.

It should also be noted that this list is not a comprehensive overview of the available government support. Some states and provinces have other, complementary programs designed to encourage companies (not just game developers) to relocate or expand their businesses in the province or state. For example, Utah has its Economic Development Tax Increment Financing program, which offers up to 30 percent tax credit for new state revenues created over a 5-10-year period. Wherever possible, we've provided links to the most specific information about each program available online, most of which include contact information for government representatives who can help answer questions.

United States

State/Territory Program Incentive Notes Agency
Alabama Alabama Film Incentive Rebates on 35% of Alabama labor, 25% of non-payroll expenditures Total production cost must fall between $500,000 and $20 million Alabama Film Agency
Arkansas Arkansas Film Commission Rebates on 20% of qualifying expenditures, plus 10% for Arkansas labor Companies must spend $200,000 on the project in a six-month period Arkansas Film Commission
Colorado Colorado Film Incentive Rebates on 20% of Colorado expenditures Program has limited funding each fiscal year Colorado Office of Film, Television, Media
Connecticut Digital Media and Motion Picture Tax Credit 10% to 30% tax credit on Connecticut expenditures Credits issued on a sliding scale; only >$1 million productions get full 30% credit Department of Economic and Community Development
Florida Entertainment Industry Financial Incentive Program 20% to 30% tax credit on expenditures (including wages) $8 million incentive cap per project Office of Film & Entertainment
Georgia Entertainment Industry Investment Act 20% to 30% tax credit Project must spend minimum $500,000 on qualified Georgia expenditures, entire program has a fiscal year cap of $25 million Georgia Film, Music & Digital Entertainment Office
Hawaii Motion Picture, Digital Media, & Film Production Tax Credit 15% to 20% tax credit on Hawaii expenditures $8 million cap per qualified production Hawaii Film Office
Louisiana Digital Interactive Media and Software Development Incentive 35% tax credit on labor, 25% tax credit on expenses No cap, no minimum requirement, option to take a rebate worth 85% of tax credit Louisiana Economic Development
Maine The Maine Attraction Film Incentive Tax rebate on 12% of Maine resident labor, tax credits on 5% of other production expenses Minimum qualified expenditure of $75,000, credit cannot exceed taxes owed Maine Film Office
Michigan 2013 Film and Digital Media Incentive 32% of payroll, 27% of production expenditures Minimum $100,000 spend required, incentives reduced beginning in 2015 Pure Michigan Film Office
Mississippi Motion Picture Production Incentive 25% rebate of base investment made in the state, 30% of resident payroll $50,000 minimum spend to qualify, $8 million rebate cap per project Mississippi Department of Revenue
New Jersey Edison Innovation Digital Media Tax Credit Program 20% tax credit for payroll and production expenses Minimum $2 million of qualified expenditures, half of which are NJ resident salaries, must create and maintain 10 new full-time jobs with minimum $65,000 salary New Jersey Motion Picture & Television Commission
New Mexico NM Refundable Film Production Tax Credit 25% tax credit on labor and qualifying expenditures No minimum spend requirement, claims to be submitted annually New Mexico Film Office
North Carolina Digital Media Credit 15% of wages, 20% on research expenses paid to NC schools Minimum $50,000 spend to qualify; $7.5 million cap on credits received North Carolina Department of Commerce
Ohio Ohio Motion Picture Tax Credit 35% tax credit for resident wages, 25% for other expenditures Minimum $300,000 Ohio spend to qualify Ohio Film Office
Puerto Rico Puerto Rico Production Tax Credit Program 40% tax credit on wages, production costs Minimum spend of $100,000 Puerto Rico Film Commission
Rhode Island Motion Picture Tax Credit 25% tax credit on wages, production costs Minimum spend of $100,000, $5 million cap on credit Rhode Island Film and TV Office
Texas Moving Image Industry Incentive Program Up to 17.5% of wages and expenses No cap on amount, $100,000 minimum spend required Texas Film Commission
Utah Motion Picture Incentive Program Up to 20% tax credit on payroll and in-state spending $6.8 million annual incentive cap for the program Utah Film Commission
Virginia Virginia Motion Picture Production Tax Credit Up to 20% tax credit for wages and expense, plus up to an extra 20% on wages if eligible spending tops $1 million Minimum $250,000 in-state spending to qualify Virginia Film Office
Wisconsin Wisconsin Film Tax Credit 25% wages and expenses Wages for first three years of development must top $100,000 Department of Tourism

Canada

Province Program Incentive Notes Agency
British Columbia BC Interactive Digital Media Tax Credit 17.5% of qualified BC labor Minimum cost restrictions apply Ministry of Finance
Manitoba Manitoba Interactive Digital Media Tax Credit 40% of eligible labor Max credit of $500,000 per project Manitoba Innovation, Energy, and Mines
New Brunswick NB Digital Media Development Program 30% of eligible labor Max rebate of $15,000 per employee, $500,0000 rebate per year New Brunswick Department of Economic Development
Nova Scotia NS Digital Media Tax Credit Lesser of 50% of eligible labor or 25% of total Nova Scotia expenditures (with bonuses for development outside Halifax) Set to expire Dec. 31, 2013 Nova Scotia Department of Finance
Ontario Ontario Interactive Digital Media Tax Credit (OIDMTC) 40% of eligible labor and eligible marketing/distribution costs Max marketing/distribution credit of $100,000 per project Ontario Media Development Corporation
Prince Edward Island PEI Video Game Labour Rebate 30% of eligible labor Rebates payable on a quarterly basis Innovation PEI
Quebec Quebec Tax Credit for the Production of Multimedia Titles Up to 37.5% of eligible labor Credits can be used for individual titles or overall activity Invest Quebec

5 Comments

Adam Coate CEO & Founder, Coate Games

34 34 1.0
Thanks for putting this together. Surprising this isn't taken advantage of more.

Posted:A year ago

#1
This is a nice list indeed.
Any chance of expanding it to Non US/Canadian territories as well?

Posted:A year ago

#2

Paul Heydon Managing Director, Avista Partners

5 0 0.0
this should be expanded to globally. best program bar none is in Finland. http://www.tekes.fi/en/community/Home/351/Home/473/

Posted:A year ago

#3
Dude, check whats going on in Mexico, we have this tax credit too, and we also are North America ;) contact me if you need more info.

Posted:A year ago

#4
Hi Brendan,

I read with interest your story from May 2013 about video games tax credit.

Would you be kind enough to consider adding the French video games tax credit (20%) to your list? It has existed since 2008 and is critical to retain game developers in France.

More info on: http://www.invest-in-france.org/Medias/Publications/1735/video-games-france-june-2012.pdf

Best,


Romain POIROT LELLIG

Posted:11 months ago

#5

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