The Basics
App development can qualify for Louisiana's digital interactive media tax credit. Photo by ilamont.com.
The Louisiana Digital Interactive Media Program is a tax credit awarded for the development of interactive software such as video games, training software, web platforms, and mobile apps that are built for commercial sale and use.
The primary objective of the tax credit is to encourage development of digital interactive media products and platforms in order to achieve an independent, self-supporting industry. Other goals are to attract private investment, encourage increased employment opportunities within the tech sector, compete better with other states in this industry, and encourage the development of new educational programs designed to support the new industry.
The incentive comes in the form of a tax credit, which can be applied against Louisiana tax liability. The credits are transferable, which means it can be sold on the secondary market, or transferred to investors, and are redeemable for a period of ten years after they’re originally issued. There isn’t even a limit on the number of transfers.
Unfortunately for me, but fortunately for you, Louisiana Economic Development provides great advisors who will guide you through the application process. You will need to hire a CPA at the end of the process.
The Incentive
Qualified expenditures such as hardware, software, labor, or leases receive an award of 25% as long as the work is done in Louisiana. There is no minimum investment. If the work is not done in the state, or is associated with administrative, clerical, marketing, or distribution, the expenditure will not qualify.
For every Louisiana resident you hire, you are entitled to a 35% tax credit on payroll expenditures such as salary, wages, and related benefits.
There’s no maximum award for this program, either per project, company, or overall.
The Application
There are no fees to apply, and you can apply for the credit before you begin your project or even spending money on the project. Each individual project must submit an application, which makes it easier for the state to track production costs and tax credits awarded.
The only way to know if your project qualifies is to apply. Since there’s no fee and no obligation to enter production here if you don’t get a tax credit, there’s no harm in applying.
Getting Paid
If your project is qualified as eligible, qualified expenses are determined, and Louisiana Economic Development issues a “Pre-Certification” letter that provides guidelines.
Once the project is complete, you submit a cost report, performed by a CPA to LED. LED then issues a “final certification” letter, which officially issues the tax credit. At this point, you can sell or transfer the tax credit to someone else. To redeem the tax credit, you must work with a designated representative from the Louisiana Department of Revenue.