A 3457: Extends the period during which the empire state digital gaming tax credit may be claimed to 01/01/2032; amends the eligibility criteria for game development companies by changing the yearly timeframe structure, lowering the dollar threshold per production, and removing the in-state cost incurred threshold to accurately fit current digital gaming industry models; allows unused credits to be rolled over to the following tax year.

  
  STATE OF NEW YORK ________________________________________________________________________ 3457 2025-2026 Regular Sessions  IN ASSEMBLY January 27, 2025 ___________ Introduced by M. of A. McDONALD, SEAWRIGHT, LUNSFORD, STIRPE, TAYLOR, BRABENEC, SLATER, BLUMENCRANZ, BRONSON, BICHOTTE HERMELYN, DAVILA, SIMPSON -- Multi-Sponsored by -- M. of A. LEVENBERG -- read once and referred to the Committee on Ways and Means AN ACT to amend the tax law, in relation to the eligibility criteria for the digital gaming tax credit The People of the State of New York, represented in Senate and Assem- bly, do enact as follows: 1 Section 1. Paragraph 1 of subdivision (a) and subdivision (b) and (c) 2 of section 45 of the tax law, as added by section 1 of part OO of chap- 3 ter 59 of the laws of 2022, are amended to read as follows: 4 (1) A taxpayer which is a digital gaming media production entity 5 engaged in qualified digital gaming media production, or who is a sole 6 proprietor of or a member of a partnership, which is a digital gaming 7 media production entity engaged in qualified digital gaming media 8 production, and is subject to tax under article nine-A or twenty-two of 9 this chapter, shall be allowed a credit against such tax to be computed 10 as provided herein for taxable years beginning on or after January 11 first, two thousand twenty-three and before January first, two thousand 12 [twenty-eight] thirty-two. 13 (b) Allocation of credit. The aggregate amount of tax credits allowed 14 under this section, subdivision fifty-five of section two hundred ten-B 15 and subsection (nnn) of section six hundred six of this chapter in any 16 taxable year shall be [five] one hundred million dollars. Such credit 17 shall be allocated by the department of economic development in order of 18 priority based upon the date of filing an application for allocation of 19 digital gaming media production credit with such office. An applicant 20 shall submit an annual application which shall include all qualified 21 digital gaming media productions for the taxable year along with an 22 estimate of the digital gaming media production costs. The application 23 can be submitted no earlier than ninety days prior to the first day of EXPLANATION--Matter in italics (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD06207-02-5 
 A. 3457 2 1 the applicable taxable year. If the total amount of allocated credits 2 applied for in any particular year exceeds the aggregate amount of tax 3 credits allowed for such year under this section, such excess shall be 4 treated as having been applied for on the first day of the subsequent 5 taxable year. 6 (c) Definitions. As used in this section: 7 (1) "Qualified digital gaming media production" means: (i) a website, 8 the digital media production costs of which are paid or incurred predo- 9 minately in connection with (A) video simulation, animation, text, 10 audio, graphics or similar gaming related property embodied in digital 11 format, and (B) interactive features of digital gaming (e.g., links, 12 message boards, communities or content manipulation); (ii) video or 13 interactive games produced primarily for distribution over the internet, 14 wireless network or successors thereto; and (iii) animation, simulation 15 or embedded graphics digital gaming related software intended for 16 commercial distribution regardless of medium; provided, however, that 17 the qualified digital game development media productions described in 18 subparagraphs (i) through (iii) of this paragraph must have digital 19 media production costs equal to or in excess of [one hundred] fifty 20 thousand dollars per production. A qualified digital gaming media 21 production does not include a website, video, interactive game or soft- 22 ware that is used predominately for: electronic commerce (retail or 23 wholesale purposes other than the sale of video interactive games), 24 gambling (including activities regulated by a New York gaming agency), 25 or political advocacy purposes. 26 (2) "Digital gaming media production costs" means any costs for wages 27 [or salaries] paid to individuals, [other than actors or writers,] 28 directly employed for services performed by those individuals directly 29 [and predominantly] in the creation of a digital gaming media production 30 or productions. [Up to one hundred thousand dollars in wages and sala- 31 ries paid to such employees, other than actors and writers, directly 32 employed shall be used in the calculation of this credit.] Digital 33 gaming media production costs include but shall not be limited to 34 payments for services performed directly [and predominantly] in the 35 development (including concept creation), [design,] production (includ- 36 ing concept creation), design, production (including testing), editing 37 (including encoding) and compositing (including the integration of 38 digital files for interaction by end users) of digital gaming media. 39 Digital gaming media production costs shall not include expenses 40 incurred for the distribution, marketing, promotion, or advertising 41 content generated by end users, other costs not directly [and predomi- 42 nantly] related to the creation, production or modification of digital 43 gaming media or costs used by the taxpayer as a basis of the calculation 44 of any other tax credit allowed under this chapter. In addition, [sala- 45 ries or other income distribution] wages related to the creation of 46 digital gaming media for any person who predominately serves in a corpo- 47 rate capacity in the role of chief executive officer, chief financial 48 officer, president, treasurer or similar corporate position and who is 49 not directly engaged in services related to the creation of a digital 50 gaming media production or productions shall not be included as digital 51 gaming media production costs if the digital gaming media production 52 entity has more then ten employees. [Salaries or other income] Wages 53 paid to a person serving in such a role for the digital gaming media 54 production entity shall also not be included if the person was employed 55 by a related person of the digital gaming media production entity within 56 sixty months of the date the digital gaming media production entity 
 A. 3457 3 1 applied for the tax credit certificate described in subdivision (d) of 2 this section. For purposes of the preceding sentence, a related person 3 shall have the same meaning as the term "related person" in section four 4 hundred sixty-five of the internal revenue code. [Furthermore, any 5 income or other distribution to any individual including, but not limit- 6 ed to, licensing or royalty fees, who holds an ownership interest in a 7 digital gaming media production entity, whether or not such individual 8 is serving in the role of chief executive officer, chief financial offi- 9 cer, president, treasurer or similar position for such an entity, shall 10 not be included as digital gaming media production costs. Up to four 11 million dollars in qualified digital gaming media production costs per 12 production shall be used in the calculation of this credit.] Digital 13 gaming media production costs shall not include those costs used by the 14 taxpayer or another taxpayer as the basis calculation of any other tax 15 credit allowed under this chapter. 16 (3) "Qualified digital gaming media production costs" means digital 17 gaming media production costs only to the extent such costs are attrib- 18 utable to the use of property or the performance of services by any 19 persons within the state directly [and predominantly] in the creation, 20 production or modification of digital gaming related media. [Such total 21 production costs incurred and paid in this state shall be equal to or 22 exceed seventy-five percent of total cost of an eligible production 23 incurred and paid within and without this state.] 24 (4) "Digital gaming media production entity" means a corporation, 25 partnership, limited partnership or other entity or individual engaged 26 in qualified digital game development media production. 27 § 2. Paragraph (a) of subdivision 55 of section 210-b of the tax law, 28 as added by section 2 of part OO of chapter 59 of the laws of 2022, is 29 amended to read as follows: 30 (a) Allowance of credit. A taxpayer who is eligible pursuant to 31 section forty-five of this chapter shall be allowed a credit to be 32 computed as provided in such section forty-five against the tax imposed 33 by this article. [Under no circumstances may a single taxpayer receive 34 more than one million five hundred thousand dollars in tax credits per 35 year.] 36 § 3. Paragraph 1 of subsection (nnn) of section 606 of the tax law, as 37 added by section 4 of part OO of chapter 59 of the laws of 2022, is 38 amended to read as follows: 39 (1) Allowance of credit. A taxpayer who is eligible pursuant to 40 section forty-five of this chapter shall be allowed a credit to be 41 computed as provided in such section forty-five against the tax imposed 42 by this article. [Under no circumstances may a single taxpayer receive 43 more than one million five hundred thousand dollars in tax credits per 44 year.] 45 § 4. This act shall take effect immediately and shall apply to taxable 46 years beginning on and after January 1, 2025 and before January 1, 2032.