How The R&D Tax Credit Helps Gaming Companies Stay Competitive

Michael Warady | Business Development Regional Director

July 17, 2020. 2 min read

I love video games. My kids love video games. Even my mom loves video games. What would quarantine be without electronic entertainment? I remember how exciting it was when Pac Man, Space Invaders and Galaga came out. My friends and I would spend countless hours in someone’s basement playing these games with wired joysticks. We thought the technology was incredible! Fast forward to today where games can be played anywhere in the world and use our touch or voice or face to control them. As the gaming industry has expanded, so have creative capabilities. Innovation and technological advancement have fueled human creativity to limits beyond imagination. These advancements happened as a result of Research & Development (R & D).

Games qualify for the R & D Tax Credit by meeting the following criteria:
  • Criteria 1: Software Development / Engineering
    • The Research & Development Tax Credit requires involvement of the hard sciences.
  • Criteria 2: New, Updated or Enhanced Games
    • When the end result is something different than what you started with. The Research & Development Tax Credit accounts for the time and energy required to make those changes.
  • Criteria 3 and 4: Test and Learn
    • No matter how hard you try to get it right the first time, you won’t know if your game will work properly until it’s tested. As you learn, you eliminate the issues and test again. The R&D Tax Credit encompasses this process.
When all 4 of the above criteria are met, it is considered a qualified research project.

Almost every step in creating a video game includes research and development. We have been able to help our clients capture an average of $115,000 in credits per year by claiming the R&D Tax Credit.