There’s been a lot of press about places that are unfriendly to gamers or game developers.  Authorities in various jurisdictions have attempted to address issues of violence, sex, and gambling, either resident in or allegedly facilitated by games.  Game developers may face resistance to “techies,” marked recently by rounds of protests against “tech buses,” attacks on people wearing Heads-Up Displays, and repeated allegations of gentrification by technology workers.

Game business may wonder whether there are greener pastures for game development and operations.  In continuation of a series on favorable jurisdictions to game developers, we’ve identified U.S. jurisdictions that provide credits or incentives to video game developers.  Here’s what we’ve found:

  • Alabama:  Offers companies a rebate of up to 25% of qualifying expenditures, excluding payroll expenses.  Additionally, the Alabama Rebate will offer up to 35% of all payroll paid to state residents.  In order for a video game production to qualify for the Alabama Rebate, expenditures must be more than $500,000 but not more than $20 million.  A qualified production company that spends, in the aggregate, $150,000 or more in connection with one or more approved projects within a consecutive 12-month period qualifies for exemption from state sales, use, and lodgings taxes.  To take advantage of the Alabama Rebate, a video game company is not required to be an Alabama corporation, only a corporation, partnership, Limited Liability Company or other business entity that is a qualified production company under the act.  More information can be found here.
  • Arkansas:  Offers development companies a non-transferable rebate against qualified production costs of up to 20%, so long as said expenditures add up to more than $200,000 within a six-month period.  Additionally, the Arkansas Rebate will offer an additional 10% of payroll paid to certain types of employees who are fulltime state residents.  More information can be found here.
  • Colorado:  Offers development companies a non-transferable rebate against up to 20% of qualifying expenditures in the state of Colorado, so long as said expenditures add up to more than $100,000 for a Colorado company or $250,000 for an out-of-state company.  In addition, at least 50% of the workforce on the project must be residents of Colorado.  More information can be found here.
  • Connecticut:  Offers development companies a transferable, nonrefundable tax credit against business taxes of up to 30% of qualifying expenditures made over the course of producing a game, so long as the expenditures add up to more than $50,000.  The credit is also quite lenient with regard to what expenses qualify for purposes of meeting the $50,000 mark.  More information can be found here.
  • Florida:  Offers video game development companies that demonstrate expenditures of at least $625,000 to $8 million in expenses, wages and salaries on a single video game project within a year qualify to be reimbursed by the State for 20% of those expenditures in the form of a tax credit with an extra 5% if a video game is deemed to be “Family Friendly.”  Additionally, smaller productions may be able to qualify for tax credits under the “Independent and Emerging Media” definition if they have expenditures of at least $100,000.  Moreover, at least 75% of the employees on the project must be in-state residents.  More information can be found here.
  • Georgia:  Offers producers of qualifying video games a transferable nonrefundable tax credit of 20% of in-state expenditures against Georgia tax liability.  In addition, game production companies can increase their available tax credit by an additional 10% by including a Georgia promotional logo in all units sold and imbedded in all online promotions.  To qualify, companies have to spend a minimum of $500,000 within the state on one project or across several projects in the course of a single year.  More information can be found here.
  • Hawaii:  Offers video game developers with a minimum of $200,000 in qualified production expenditures a refundable tax credit for 20% of those costs incurred on Oahu, which may be raised to include 20% for productions located on the neighbor islands.  The credit cap is $15 million and the company must make reasonable efforts to hire local talent.  More information can be found here.
  • Kentucky:  Offers development companies a refundable tax credit against business taxes of up to 20% of qualifying expenditures, so long as said expenditures add up to more than $500,000.  More information can be found here.
  • Louisiana:  Offers the developer a transferable but nonrefundable tax credit to both video games designed to be sold through regular marketing channels and projects involving virtual worlds and online games with long-term producer involvement.  The tax credit offered by the Louisiana Act is equal to 25% of the investments made in those years, with no minimum spending requirements. Additionally, an additional 10% may be awarded based on labor costs paid to Louisiana residents.  There is no minimum and no annual cap.  Tax credits may be used to offset income tax liability in Louisiana (corporate or personal), sold back to the State for 85% face value, or brokered on the open market.  For any tax credits that are in excess of the income tax liability, the credits are refunded.  More information can be found here.
  • Maine:  Offers two incentives available to qualified companies that develop video games intended for a national audience:  the Certified Media Production Credit and the Certified Media Wage Reimbursement.  To qualify for the dual benefits of the Maine Incentive, a video game developer must spend a minimum of $75,000 in Maine over the course of one year on one or more video game productions.  The Certified Media Production Credit is a non-refundable, non-transferrable credit equal to 5% of a developer’s visual media production expense related to the production of a certified video game.  Qualifying game developers are generally reimbursed in an amount equal to 12% of total wages and salaries paid to Maine residents and 10% for total wages and salaries paid to non-residents.  More information can be found here.
  • Michigan:  Offers a refundable and transferable tax credit equal to 40% of qualified expenditures.  An additional 2% is available if development occurs in a “Core Community.”  To be eligible for this program, a production company must have a combined minimum of $100,000 of Direct Production Expenditures plus Michigan Personnel Expenditures.  Payments or compensation for any one employee in excess of $2,000,000 are not eligible for the Incentive.  More information can be found here.
  • Mississippi: Offers a rebate of 25% of the base investment in the state, including non-resident payroll. Wages paid to Mississippi residents are eligible for a 30% rebate. A production company also may receive an additional rebate of 5% of the payroll paid for any employee who is an honorably discharged veteran of the United States Armed Forces. More information can be found here.
  • Nevada:  Offers a transferrable tax credit of up to 19% on qualified, in-state expenses for films, TV series, webseries, and video games.  To earn the credit, a project must have a budget of at least $500,000, and spend 60 percent of that in Nevada. The most a single project can write off is $6 million. More information can be found here and here.
  • New Jersey:  Offers business tax credit of 20% for qualified media content production expenses.  A company must have at least $2 million of qualified digital media expenditures, including 50% of such expenses being associated with digital media salaries of new full-time employees in New Jersey.   In addition, the company must create and maintain a minimum of 10 new full-time digital media jobs in New Jersey with a minimum salary of $65,000 per year.   All remaining qualifying full-time employees included must be paid at least $36,000 per year.  More information can be found here.
  • New Mexico:  Offers a 25% non-transferable reimbursement of the total cost of all direct production expenditures on qualifying media productions, including video games.  As an added benefit for small to mid-size video game productions, the New Mexico program has no minimum in-state spending requirement and no cap.  More information can be found here.
  • North Carolina:  Offers development companies a non-transferable tax credit of up to 15% of wage and compensation expenditures (20% if expenses are paid to a qualifying community college or research university).  Credits are awarded for taxpayer’s expenses that exceed $50,000 that are paid during the taxable year in development phases, and may not exceed $7.5 million.  More information can be found here.
  • Ohio:  Offers development companies a nontransferable but refundable tax credit against business taxes of up to 25% of qualifying expenditures (not including in-state wages) made over the course of producing a game, so long as said expenditures add up to more than $300,000.  An additional 35% tax credit may be awarded against expenditures for Ohio resident wages.  More information can be found here.
  • Oregon: Offers, through the Indigenous Oregon Production Investment Fund, rebates 20% of goods/services and 10% of Oregon-based payroll (including fringe benefits). Applies to projects spending a minimum of $75,000 up to the first $1 million in Oregon for any single project or season of a series. The local producer must hire at least 80% Oregon crew, contract with a CPA for payroll services and carry production insurance. More information can be found here and here.
  • Rhode Island:  Offers a transferable but non-refundable tax credit to qualifying production companies equal to 25% of expenditures directly attributable to certified video game productions within the state.  The state also requires a budget that includes a minimum of $300,000 of in-state expenditures directly attributable to the video game production.  More information can be found here.
  • Texas:  Offers 5% for video game developers spending $100,000 to $1 million, 10% for spending $1 million to $3.5 million, and 20% for $3.5 million and above.  There is also an additional 2.5% incentive for using underutilized or economically distressed areas.  To qualify a minimum of 60% of the production days are completed in Texas and at least 70% of the development team are Texas residents.  The maximum incentive amount available to Texas game developers on a single video game production is $250,000.  Developers of computer and video games also qualify as software manufacturers under Texas law and as such are eligible for a tax exemption on items or services the use or consumption of which are “necessary and essential” to production of the completed game.  More information can be found here.
  • Virginia:  Offers a nontransferable but refundable tax credit to qualifying production companies equal to 15% of expenditures directly attributable to certified digital interactive media productions within the state during the specific tax year, which may be increased to 20% if development occurs in an economically distressed area.  An additional 10-20 percent can be added for the payroll of workers from Virginia, and each first-time industry employee is eligible for an additional credit of 10 percent.  More information can be found here.
  • Wisconsin:  Offers a nonrefundable credit equal to 25% of wages and compensation paid to Wisconsin residents for Wisconsin work done on an accredited video game, up to a maximum credit of $25,000 per employee, and a refundable but nontransferable tax credit equal to 25% of eligible expenditures paid by the game developer in producing an accredited video game.  There is also an investment credit that provides a 15% nonrefundable income tax credit for all capital investments made in the business.  In determining whether to award Film Production Investment Tax Credits to an eligible producer, the Department of Tourism will consider whether the investment will:  Occur in Wisconsin without the tax credits; enhance economic development in Wisconsin; or enhance the potential for increasing the film, video or electronic game industry in Wisconsin.  More information can be found here.

These states provide opportunities for video game developers and video game development that base operations there.  Many areas in these states have vibrant start-up scenes and have well-developed Information Technology infrastructures.  Operational infrastructure, such as high-speed network connections and well-trained customer service personnel, is at the disposal of companies in many of these areas.  With the numerous available options, a game developer may want to look to these greener pastures.