S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   3457
 
                        2025-2026 Regular Sessions
 
                           I N  A S S E M B L Y
 
                             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:
 
   Section  1. Paragraph 1 of subdivision (a) and subdivision (b) and (c)
 of section 45 of the tax law, as added by section 1 of part OO of  chap-
 ter 59 of the laws of 2022, are amended to read as follows:
   (1)  A  taxpayer  which  is  a  digital gaming media production entity
 engaged in qualified digital gaming media production, or who is  a  sole
 proprietor  of  or  a member of a partnership, which is a digital gaming
 media production  entity  engaged  in  qualified  digital  gaming  media
 production,  and is subject to tax under article nine-A or twenty-two of
 this chapter, shall be allowed a credit against such tax to be  computed
 as  provided  herein  for  taxable  years  beginning on or after January
 first, two thousand twenty-three and before January first, two  thousand
 [twenty-eight] THIRTY-TWO.
   (b)  Allocation of credit. The aggregate amount of tax credits allowed
 under this section, subdivision fifty-five of section two hundred  ten-B
 and  subsection  (nnn) of section six hundred six of this chapter in any
 taxable year shall be [five] ONE HUNDRED million  dollars.  Such  credit
 shall be allocated by the department of economic development in order of
 priority  based upon the date of filing an application for allocation of
 digital gaming media production credit with such  office.  AN  APPLICANT
 SHALL  SUBMIT  AN  ANNUAL  APPLICATION WHICH SHALL INCLUDE ALL QUALIFIED
 DIGITAL GAMING MEDIA PRODUCTIONS FOR THE  TAXABLE  YEAR  ALONG  WITH  AN
 ESTIMATE  OF  THE DIGITAL GAMING MEDIA PRODUCTION COSTS. THE APPLICATION
 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
 
 THE  APPLICABLE  TAXABLE  YEAR. If the total amount of allocated credits
 applied for in any particular year exceeds the aggregate amount  of  tax
 credits  allowed  for such year under this section, such excess shall be
 treated  as  having  been applied for on the first day of the subsequent
 taxable year.
   (c) Definitions. As used in this section:
   (1) "Qualified digital gaming media production" means: (i) a  website,
 the  digital media production costs of which are paid or incurred predo-
 minately in connection  with  (A)  video  simulation,  animation,  text,
 audio,  graphics  or similar gaming related property embodied in digital
 format, and (B) interactive features of  digital  gaming  (e.g.,  links,
 message  boards,  communities  or  content  manipulation); (ii) video or
 interactive games produced primarily for distribution over the internet,
 wireless network or successors thereto; and (iii) animation,  simulation
 or  embedded  graphics  digital  gaming  related  software  intended for
 commercial distribution regardless of medium;  provided,  however,  that
 the  qualified  digital  game development media productions described in
 subparagraphs (i) through (iii) of  this  paragraph  must  have  digital
 media  production  costs  equal  to  or in excess of [one hundred] FIFTY
 thousand dollars  per  production.  A  qualified  digital  gaming  media
 production  does not include a website, video, interactive game or soft-
 ware that is used predominately  for:  electronic  commerce  (retail  or
 wholesale  purposes  other  than  the  sale of video interactive games),
 gambling (including activities regulated by a New York  gaming  agency),
 or political advocacy purposes.
   (2)  "Digital gaming media production costs" means any costs for wages
 [or salaries] paid to  individuals,  [other  than  actors  or  writers,]
 directly  employed  for services performed by those individuals directly
 [and predominantly] in the creation of a digital gaming media production
 or productions. [Up to one hundred thousand dollars in wages  and  sala-
 ries  paid  to  such  employees, other than actors and writers, directly
 employed shall be used in  the  calculation  of  this  credit.]  Digital
 gaming  media  production  costs  include  but  shall  not be limited to
 payments for services performed  directly  [and  predominantly]  in  the
 development  (including concept creation), [design,] production (includ-
 ing concept creation), design, production (including  testing),  editing
 (including  encoding)  and  compositing  (including  the  integration of
 digital files for interaction by end users)  of  digital  gaming  media.
 Digital  gaming  media  production  costs  shall  not  include  expenses
 incurred for the  distribution,  marketing,  promotion,  or  advertising
 content  generated  by end users, other costs not directly [and predomi-
 nantly] related to the creation, production or modification  of  digital
 gaming media or costs used by the taxpayer as a basis of the calculation
 of  any other tax credit allowed under this chapter. In addition, [sala-
 ries or other income distribution] WAGES  related  to  the  creation  of
 digital gaming media for any person who PREDOMINATELY serves in A CORPO-
 RATE  CAPACITY  IN  the role of chief executive officer, chief financial
 officer, president, treasurer or similar CORPORATE position AND  WHO  IS
 NOT  DIRECTLY  ENGAGED  IN SERVICES RELATED TO THE CREATION OF A DIGITAL
 GAMING MEDIA PRODUCTION OR PRODUCTIONS shall not be included as  digital
 gaming  media  production  costs  if the digital gaming media production
 entity has more then ten employees. [Salaries  or  other  income]  WAGES
 PAID  to  a  person  serving in such a role for the digital gaming media
 production entity shall also not be included if the person was  employed
 by a related person of the digital gaming media production entity within
 sixty  months  of  the  date  the digital gaming media production entity
 A. 3457                             3
 
 applied for the tax credit certificate described in subdivision  (d)  of
 this  section.  For purposes of the preceding sentence, a related person
 shall have the same meaning as the term "related person" in section four
 hundred  sixty-five  of  the  internal  revenue  code. [Furthermore, any
 income or other distribution to any individual including, but not limit-
 ed to, licensing or royalty fees, who holds an ownership interest  in  a
 digital  gaming  media production entity, whether or not such individual
 is serving in the role of chief executive officer, chief financial offi-
 cer, president, treasurer or similar position for such an entity,  shall
 not  be  included  as  digital gaming media production costs. Up to four
 million dollars in qualified digital gaming media production  costs  per
 production  shall  be  used  in the calculation of this credit.] Digital
 gaming media production costs shall not include those costs used by  the
 taxpayer  or  another taxpayer as the basis calculation of any other tax
 credit allowed under this chapter.
   (3) "Qualified digital gaming media production  costs"  means  digital
 gaming  media production costs only to the extent such costs are attrib-
 utable to the use of property or the  performance  of  services  by  any
 persons  within  the state directly [and predominantly] in the creation,
 production or modification of digital gaming related media. [Such  total
 production  costs  incurred  and paid in this state shall be equal to or
 exceed seventy-five percent of total  cost  of  an  eligible  production
 incurred and paid within and without this state.]
   (4)  "Digital  gaming  media  production  entity" means a corporation,
 partnership, limited partnership or other entity or  individual  engaged
 in qualified digital game development media production.
   §  2. Paragraph (a) of subdivision 55 of section 210-b of the tax law,
 as added by section 2 of part OO of chapter 59 of the laws of  2022,  is
 amended to read as follows:
   (a)  Allowance  of  credit.  A  taxpayer  who  is eligible pursuant to
 section forty-five of this chapter shall  be  allowed  a  credit  to  be
 computed  as provided in such section forty-five against the tax imposed
 by this article. [Under no circumstances may a single  taxpayer  receive
 more  than  one million five hundred thousand dollars in tax credits per
 year.]
   § 3. Paragraph 1 of subsection (nnn) of section 606 of the tax law, as
 added by section 4 of part OO of chapter 59 of  the  laws  of  2022,  is
 amended to read as follows:
   (1)  Allowance  of  credit.  A  taxpayer  who  is eligible pursuant to
 section forty-five of this chapter shall  be  allowed  a  credit  to  be
 computed  as provided in such section forty-five against the tax imposed
 by this article. [Under no circumstances may a single  taxpayer  receive
 more  than  one million five hundred thousand dollars in tax credits per
 year.]
   § 4. This act shall take effect immediately and shall apply to taxable
 years beginning on and after January 1, 2025 and before January 1, 2032.