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