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A Proposed Change To Gaming Media Production Credit Would Raise The Maximum Qualified Production Costs Per Project
By David Carlucci
Empire State Development has proposed amendments to the regulations governing the New York State Digital Game Development Program. The public comment period closes in October. The amendment is narrow, but it comes as several larger questions about the program remain open.
Where the Program Came From
The Legislature created the Empire State Digital Gaming Media Production Credit in the 2022 state budget. The rationale was talent retention. Five New York schools have appeared in national rankings of the top undergraduate game design programs, including New York University, Rochester Institute of Technology, Rensselaer Polytechnic Institute and Cornell. The state has invested more than $20 million in game development programs at those campuses. Many graduates then take jobs in Austin, Los Angeles, Seattle, and Montreal.
The credit provides a refundable benefit equal to 25 percent of eligible wage costs for work performed inside the Metropolitan Commuter Transportation District and 35 percent for work performed elsewhere in the state. Studios apply to Empire State Development before they begin incurring qualified wages. The program is capped at $5 million a year statewide, and no single taxpayer may receive more than $1.5 million in a year.
What Is Being Proposed
The amendment is technical. It would raise the maximum qualified production costs per project used to calculate the credit from $4 million to $5 million. That change was enacted in the 2025 state budget. The regulation is catching up to the statute.
The rest of the framework stays in place. A studio must incur at least $50,000 in development costs. At least 51 percent of a project’s costs must be incurred in New York, reduced from the 75 percent threshold in the original law. Up to $200,000 of the wages paid to any one individual may be used in the calculation. The annual ceiling of $1.5 million per taxpayer remains.
Who Actually Uses It
The typical applicant is small. The $50,000 minimum is low enough that a four- or six-person team can reach it on a single project, and applicants are distributed across Rochester, Troy, Buffalo, Syracuse, Ithaca, and the Hudson Valley. Because the credit covers wages and caps any individual’s wages at $200,000, it supports engineers, artists, and designers rather than founders or executives.
One point worth noting for anyone preparing comments is the interaction between the higher project cap and the per-taxpayer ceiling. Because the ceiling did not change, studios at the two credit rates do not benefit equally from the increase, and the practical value of the amendment varies by where a studio is located. Stakeholders on both sides of the Metropolitan Commuter Transportation District line have reason to weigh in, for different reasons.
Scale and Context
New York commits $700 million a year to its film production credit and $5 million a year to digital games. The comparison is imperfect, since film productions are larger and more capital intensive. Empire State Development’s own materials describe digital game development in New York as a $5 billion industry.
The proposal also comes during a contraction. The 2026 State of the Game Industry survey found that a third of United States respondents had been laid off in the previous two years, and independent trackers put cumulative industry job losses since 2022 in the tens of thousands.
The 2027 Sunset
The credit applies to taxable years beginning before January 1, 2028. Absent legislative action, Empire State Development is finalizing regulations for a program with roughly two application cycles remaining.
Legislation has been introduced. Senator Patricia Fahy and Assemblymember John McDonald carry bills that would extend the credit through 2031, remove the annual per taxpayer cap, and eliminate the in state cost threshold. The sponsors’ memo states that the eligibility rules have made it extremely difficult for a significant number of New York game development companies to qualify, despite those companies falling squarely within the intent of the incentive. The bill remains in the Senate Budget and Revenue Committee.
What the Credit Does Not Cover
The credit applies to wages and salaries only. It excludes marketing, distribution, promotion and advertising. It also excludes the salaries of executive staff at companies with more than ten employees. It is a below the line labor credit directed at the people building the product.
How to Comment
Comments go to Empire State Development and are open now. County economic development offices, industrial development agencies, colleges with design programs, and studios themselves all have standing to file.
Comments of a few paragraphs carry more weight than most people assume, and comment periods are where technical corrections of this kind get made.
This one closes in October.
David Carlucci consults organizations on navigating government and securing funding. He served for ten years in the New York Senate.
