On August 10, 2022, the New York State Department of Economic Development issued emergency regulations to implement the state’s Digital Gaming Media Production Tax Credit Program. The legislature enacted the program to encourage, attract, and grow the digital game development industry in New York State. The purpose of the tax incentive, which was included in New York’s 2022 budget as an economic development incentive, is to offset some of the production costs associated with developing video games in New York State, including wages for technology and design job and leasing costs.

The credit is currently capped at $25 million, and will run from January 1, 2023 to December 31, 2027. Each year $5 million will become available to applicants. Specifically, certain digital gaming media production entities are allowed a 25% tax credit on qualified expenses for taxable years beginning on or after January 1, 2023 and before January 1, 2028. Taxpayers may be entitled to an additional 10% credit for costs incurred and paid outside of the metropolitan commuter transportation district (e.g., outside of New York City, Rockland, Nassau, Suffolk, Orange, Putnam, Westchester, and Dutchess Counties). Single taxpayers are limited to $1.5 million in tax credits per year.

The emergency regulations address the application process, which is split into initial and final application phases. In particular, taxpayers should be aware that they must submit an initial application prior to paying or incurring relevant costs, but no sooner than 90 days before the start date of their qualified digital gaming media production.

The notice published in the New York State Register serves as both a notice of emergency adoption and a notice of proposed rule making. The emergency rule is set to expire on October 22, 2022. The Department will accept public comments until 60 days after the notice’s publication. We will publish further updates as they are made, and members of our team are available to help answer any questions you might have about this credit.

NY Reg, Aug. 10, 2022, at 9-10.