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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.

United States

State/TerritoryProgramIncentiveNotesAgency
AlabamaAlabama Film IncentiveRebates on 35% of Alabama labor, 25% of non-payroll expendituresTotal production cost must fall between $500,000 and $20 millionAlabama Film Agency
ArkansasArkansas Film CommissionRebates on 20% of qualifying expenditures, plus 10% for Arkansas laborCompanies must spend $200,000 on the project in a six-month periodArkansas Film Commission
ColoradoColorado Film IncentiveRebates on 20% of Colorado expendituresProgram has limited funding each fiscal yearColorado Office of Film, Television, Media
ConnecticutDigital Media and Motion Picture Tax Credit10% to 30% tax credit on Connecticut expendituresCredits issued on a sliding scale; only >$1 million productions get full 30% creditDepartment of Economic and Community Development
FloridaEntertainment Industry Financial Incentive Program20% to 30% tax credit on expenditures (including wages)$8 million incentive cap per projectOffice of Film & Entertainment
GeorgiaEntertainment Industry Investment Act20% to 30% tax creditProject must spend minimum $500,000 on qualified Georgia expenditures, entire program has a fiscal year cap of $25 millionGeorgia Film, Music & Digital Entertainment Office
HawaiiMotion Picture, Digital Media, & Film Production Tax Credit15% to 20% tax credit on Hawaii expenditures$8 million cap per qualified productionHawaii Film Office
LouisianaDigital Interactive Media and Software Development Incentive35% tax credit on labor, 25% tax credit on expensesNo cap, no minimum requirement, option to take a rebate worth 85% of tax creditLouisiana Economic Development
MaineThe Maine Attraction Film IncentiveTax rebate on 12% of Maine resident labor, tax credits on 5% of other production expensesMinimum qualified expenditure of $75,000, credit cannot exceed taxes owedMaine Film Office
Michigan2013 Film and Digital Media Incentive32% of payroll, 27% of production expendituresMinimum $100,000 spend required, incentives reduced beginning in 2015Pure Michigan Film Office
MississippiMotion Picture Production Incentive25% rebate of base investment made in the state, 30% of resident payroll$50,000 minimum spend to qualify, $8 million rebate cap per projectMississippi Department of Revenue
New JerseyEdison Innovation Digital Media Tax Credit Program20% tax credit for payroll and production expensesMinimum $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 salaryNew Jersey Motion Picture & Television Commission
New MexicoNM Refundable Film Production Tax Credit25% tax credit on labor and qualifying expendituresNo minimum spend requirement, claims to be submitted annuallyNew Mexico Film Office
North CarolinaDigital Media Credit15% of wages, 20% on research expenses paid to NC schoolsMinimum $50,000 spend to qualify; $7.5 million cap on credits receivedNorth Carolina Department of Commerce
OhioOhio Motion Picture Tax Credit35% tax credit for resident wages, 25% for other expendituresMinimum $300,000 Ohio spend to qualifyOhio Film Office
Puerto RicoPuerto Rico Production Tax Credit Program40% tax credit on wages, production costs Minimum spend of $100,000Puerto Rico Film Commission
Rhode IslandMotion Picture Tax Credit25% tax credit on wages, production costs Minimum spend of $100,000, $5 million cap on creditRhode Island Film and TV Office
TexasMoving Image Industry Incentive ProgramUp to 17.5% of wages and expensesNo cap on amount, $100,000 minimum spend requiredTexas Film Commission
UtahMotion Picture Incentive ProgramUp to 20% tax credit on payroll and in-state spending$6.8 million annual incentive cap for the programUtah Film Commission
VirginiaVirginia Motion Picture Production Tax CreditUp to 20% tax credit for wages and expense, plus up to an extra 20% on wages if eligible spending tops $1 millionMinimum $250,000 in-state spending to qualifyVirginia Film Office
WisconsinWisconsin Film Tax Credit25% wages and expensesWages for first three years of development must top $100,000Department of Tourism

Canada

ProvinceProgramIncentiveNotesAgency
British ColumbiaBC Interactive Digital Media Tax Credit17.5% of qualified BC laborMinimum cost restrictions applyMinistry of Finance
ManitobaManitoba Interactive Digital Media Tax Credit40% of eligible laborMax credit of $500,000 per projectManitoba Innovation, Energy, and Mines
New BrunswickNB Digital Media Development Program30% of eligible laborMax rebate of $15,000 per employee, $500,0000 rebate per yearNew Brunswick Department of Economic Development
Nova ScotiaNS Digital Media Tax CreditLesser of 50% of eligible labor or 25% of total Nova Scotia expenditures (with bonuses for development outside Halifax)Set to expire Dec. 31, 2013Nova Scotia Department of Finance
OntarioOntario Interactive Digital Media Tax Credit (OIDMTC)40% of eligible labor and eligible marketing/distribution costsMax marketing/distribution credit of $100,000 per projectOntario Media Development Corporation
Prince Edward IslandPEI Video Game Labour Rebate30% of eligible laborRebates payable on a quarterly basisInnovation PEI
QuebecQuebec Tax Credit for the Production of Multimedia Titles Up to 37.5% of eligible laborCredits can be used for individual titles or overall activityInvest Quebec

Latest comments (5)

Adam Coate CEO & Founder, Coate Games3 years ago
Thanks for putting this together. Surprising this isn't taken advantage of more.
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This is a nice list indeed.
Any chance of expanding it to Non US/Canadian territories as well?
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Paul Heydon Managing Director, Avista Partners3 years ago
this should be expanded to globally. best program bar none is in Finland. http://www.tekes.fi/en/community/Home/351/Home/473/
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Show all comments (5)
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.
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Romain POIROT-LELLIG Director, GT Advisers3 years ago
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
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