What's happening
This bill creates new tax credits for music and digital gaming media production in New York State, with reporting requirements and regional allocations.
Why it matters
Encourages in-state production and job growth. By offering substantial tax credits (25%, with an extra 10% for certain regions) for eligible costs, the bill aims to attract and retain music and digital gaming media production businesses in New York. This could lead to more local hiring, infrastructure investment, and economic development, especially in upstate and non-NYC regions.
Targets economic diversification and regional balance. The credits are regionally allocated (50% NYC, 20% suburban counties, 30% rest of state), with provisions to roll over unused credits. This design tries to ensure that economic benefits reach beyond New York City, potentially stimulating growth in less economically robust areas.
Establishes accountability and transparency. The bill requires detailed, biannual and triennial reports on how credits are allocated and used, including data on project size, employment, and regional impact. These requirements aim to provide oversight, inform policymakers, and allow the public to assess the effectiveness of the incentives.
Excludes double-dipping and narrows eligible activities. To prevent abuse, the bill bars “double-dipping,” meaning costs claimed for these credits can’t also be used to claim other state or out-of-state tax credits. It also narrowly defines eligible production activities and costs, focusing support on genuine production work rather than broader promotional or executive expenses.
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Who cares
Headline styles
Tax Credits for Music, Gaming
Plain English, a few words. Used as the page title.
Sponsors
1 Co-sponsor
History
- Referred to investigations and government operations
- Referred to investigations and government operations
Companion bill
The same bill in the other chamber. A bill becomes law when one version passes both houses and the governor signs it, so either number can carry it.
Tax Credits for Music, Gaming
In Assembly Committee · Ways And Means · Sponsor Joseph Lentol
Full text
9 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
2966
2019-2020 Regular Sessions
IN SENATE
January 31, 2019
Introduced by Sen. BENJAMIN -- read twice and ordered printed, and when printed to be committed to the Committee on Investigations and Government Operations
AN ACT to amend the tax law and the economic development law, in relation to the creation of the empire state music production credit and the empire state digital gaming media production credit; to repeal subdivision 13 of section 352 of the economic development law relating thereto; and providing for the repeal of certain provisions upon expiration thereof
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. The tax law is amended by adding a new section 44 to read as follows:
§ 44. Empire state music production credit. (a) Allowance of credit. (1) A taxpayer which is a music production entity engaged in qualified music production, or who is a sole proprietor of or a member of a partnership, which is a music production entity engaged in qualified music 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.
(2) The amount of the credit shall be the product (or pro rata share of the product, in the case of a member of a partnership or limited liability company) of twenty-five percent and the eligible production costs of one or more qualified music productions.
(3) Eligible production costs for a qualified music production incurred and paid in this state but outside such metropolitan commuter transportation district shall be eligible for a credit of ten percent of such eligible production costs in addition to the credit specified in paragraph two of this subdivision.
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD04548-01-9
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(4) Eligible 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 or allowed in any other state.
(b) Allocation of credit. The aggregate amount of tax credits allowed under this section, subdivision fifty-three of section two hundred ten-B and subsection (jjj) of section six hundred six of this chapter in any taxable year shall be fifty million dollars. The aggregate amount of credits for any taxable year shall be distributed on a regional basis as follows: fifty percent of the aggregate amount of credits shall be available for qualified music productions that incur at least sixty percent of eligible production costs for a qualified music production in region one; twenty percent of the aggregate amount of credits shall be available for qualified music productions that incur at least sixty percent of eligible production costs for a qualified music production in region two; and thirty percent of the aggregate amount of credits shall be available for qualified music productions that incur at least sixty percent of eligible production costs for a qualified music production in region three. If such regional distribution is not fully allocated in any taxable year, the remainder of such credits shall be available for allocation to any region in the subsequent tax year. For the purposes of this section region one shall contain the city of New York; region two shall contain the counties of Westchester, Rockland, Nassau and Suffolk; and region three shall contain any county not contained in regions one and two. Such credit shall be allocated by the empire state development corporation among taxpayers in order of priority based upon the date of filing an application for allocation of music production credits with such office. 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) "Music production" means the creation of a sound recording and any related music video, either of which is intended for commercial release. A "music production" does not include recordings that are primarily spoken word or wildlife or nature sounds, or produced for instructional use or advertising or promotional purposes.
(2) "Qualified music production" is a music production in which eligible production costs equal to or are in excess of seven thousand five hundred dollars if incurred and paid in this state in the twelve months preceding the date on which the credit is claimed. Provided, however, if such production costs are incurred and paid outside the metropolitan commuter transportation district in this state, such production costs shall be equal to or in excess of three thousand seven hundred fifty dollars to be a qualified music production for the purposes of this paragraph.
(3) (A) "Eligible production costs for a qualified music production" are costs incurred and paid in this state for tangible property and services used in the production of qualified music production, as determined by the department of economic development, including, but not limited to: (i) studio rental fees and related costs, (ii) instrument and equipment rental fees, (iii) production session fees for musicians, programmers, engineers, and technicians and (iv) mixing and mastering services.
(B) Eligible production costs shall not include: (i) costs for tangible property or services used or performed outside of this state, (ii)
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performance fees for featured artists or featured guest artists receiving royalties or advances on royalties or special performance fees (other than those that would normally be collected by a performing rights organization) pursuant to an agreement directly with the producer or employer, (iii) salaries or related compensation for producers or songwriters, (iv) composer, artist or producer residual royalties or advances, (v) licensing fees for samples, (vi) interpolations or other music clearance costs, (vii) mastering or post-production expenditures for projects that were not principally tracked and recorded in this state, (viii) any costs associated with manufacturing, duplication, packaging, distribution, promotion, marketing or touring not specifically outlined in this subparagraph, or (ix) local transportation expenditures directly related to music production and provided at or to the site of such music production. With respect to the production of a music video, eligible production costs are those defined in paragraph two of subdivision (b) of section twenty-four of this article. 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.
(d) Cross-references. For applications of the credit provided for in this section, see the following provisions of this chapter:
(1) Article nine-A: section two hundred ten-B, subdivision fiftythree.
(2) Article twenty-two: section six hundred six, subsection (i), paragraph one, subparagraph (B), clause (xliv).
(3) Article twenty-two: section six hundred six, subsection (jjj).
§ 2. Section 210-B of the tax law is amended by adding a new subdivision 53 to read as follows:
53. Empire state music production credit. (a) Allowance of credit. A taxpayer who is eligible pursuant to section forty-four of this chapter shall be allowed a credit to be computed as provided in such section forty-four against the tax imposed by this article.
(b) Application of credit. The credit allowed under this subdivision for any taxable year shall not reduce the tax due for such year to less than the amount prescribed in paragraph (d) of subdivision one of section two hundred ten of this article. Provided, however, that if the amount of the credit allowable under this subdivision for any taxable year reduces the tax to such amount, the excess shall be treated as an overpayment of tax to be credited or refunded in accordance with the provisions of section one thousand eighty-six of this chapter, provided, however, no interest shall be paid thereon.
§ 3. Subparagraph (B) of paragraph 1 of subsection (i) of section 606 of the tax law is amended by adding a new clause (xliv) to read as follows:
(xliv) Empire state music Amount of credit under production credit under subdivision fifty-three subsection (jjj) of section two hundred ten-B
§ 4. Section 606 of the tax law is amended by adding a new subsection (jjj) to read as follows:
(jjj) Empire state music production credit. (1) Allowance of credit. A taxpayer who is eligible pursuant to section forty-four of this chapter shall be allowed a credit to be computed as provided in such section forty-four against the tax imposed by this article.
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(2) Application of credit. If the amount of the credit allowable under this subsection for any taxable year exceeds the taxpayer's tax for such year, the excess shall be treated as an overpayment of tax to be credited or refunded as provided in section six hundred eighty-six of this article, provided, however, that no interest shall be paid thereon.
§ 5. The tax law is amended by adding a new section 45 to read as follows:
§ 45. Empire state digital gaming media production credit. (a) Allowance of credit. (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.
(2) The amount of the credit shall be the product (or pro rata share of the product, in the case of a member of a partnership or limited liability company) of twenty-five percent and the eligible production costs of one or more qualified digital gaming media productions.
(3) Eligible digital gaming media production costs for a qualified digital gaming media production incurred and paid in this state but outside such metropolitan commuter transportation district shall be eligible for a credit of ten percent of such eligible production costs in addition to the credit specified in paragraph two of this subdivision.
(4) Eligible 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 or allowed in any other state.
(b) Allocation of credit. The aggregate amount of tax credits allowed under this section, subdivision fifty-four of section two hundred ten-B and subsection (kkk) of section six hundred six of this chapter in any taxable year shall be fifty million dollars. The aggregate amount of credits for any taxable year must be distributed on a regional basis as follows: fifty percent of the aggregate amount of credits shall be available for qualified digital gaming media productions that incur at least sixty percent of eligible production costs for a qualified digital gaming media production in region one; twenty percent of the aggregate amount of credits shall be available for qualified digital gaming media productions that incur at least sixty percent of eligible production costs for a qualified digital gaming media production in region two; and thirty percent of the aggregate amount of credits shall be available for qualified digital gaming media productions that incur at least sixty percent of eligible production costs for a qualified digital gaming media production in region three. If such regional distribution is not fully allocated in any taxable year, the remainder of such credits shall be available for allocation to any region in the subsequent tax year. For the purposes of this section region one shall contain the city of New York; region two shall contain the counties of Westchester, Rockland, Nassau and Suffolk; and region three shall contain any county not contained in regions one and two. Such credit shall be allocated by the empire state development corporation among taxpayers in order of priority based upon the date of filing an application for allocation of digital gaming media production credit with such office. 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
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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:
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Sponsor's memo
Title of bill
An act to amend the tax law and the economic development law, in relation to the creation of the empire state music production credit and the empire state digital gaming media production credit; to repeal subdivision 13 of section 352 of the economic development law relating thereto; and providing for the repeal of certain provisions upon expira- tion thereof
Purpose
To remake the digital media gaming and music credits adopted in Part K of the Revenue bill in last year's budget, into a "below-the-line" production credit This will allow both the industries to accurately calculate the benefits of the programs, allow the State to better moni- tor the credits, and to ease access to the incentives. Both industries are of the opinion that the credits as currently in statute are unwork- able and are actually serving as a deterrent to growth for New York companies.
Summary of provisions
Section one creates a new section forty-four in the Tax Law to provide a production incentive for the creation of music products in New York.
Read the full memo (955 words)
Subdivision (a) lays out eligibility criteria for companies that file under the corporate franchise or personal income taxes.
Subdivision (b) limits the annual amount of refundable credits available under the program to no more that $50 million a year, allocates the available credits to three regions of the state, namely New. York City at fifty percent of the total credit allocations per year, the metro New York suburbs at twenty percent and Upstate at thirty percent. A project must perform at least 60 percent of eligible costs within a region to qualify for credits in that region.
Subdivision (c) defines eligible "below the line" costs and qualified productions. Sections 2, 3 and 4 establish the credit in Articles 9-A and 22 of the Tax Law.
Sections 5 through 8 create a new section forty-five of the Tax Law for digital gaming that mirrors the incentives for the music industry.
Section 9 authorizes the Commissioner of Economic Development to estab- lish corresponding regulations and procedures to allow for the effective administration of the credit.
Sections 10, 11 and 12 repeal the amendments to the Excelsior Credit program adopted as part of the SFY 2016 budget.
Section 13 creates a new section 243 in the economic development law for reporting requirements for the two new programs. Reports will be filed by ESDC on a biannual basis to be sent to the Director of the Budget and the fiscal chairs of the legislature. The reports must detail the amount of credits claimed and paid, the number of projects by size and region, and the name of the taxpayer or taxpaying entity receiving the credits. In addition, every third year ESDC will be required to produce and pres- ent a report to the Executive and the Legislature prepared by an inde- pendent third party on how the programs are operating and the overall economic impact of the programs on the State economy.
Section 14 contains the effective date of the act and a five year sunset to the programs.
Justification
This bill is designed to provide meaningful and effective incentives two industries essential to the future of. the State. Provisions hoping to aid and intent both music and digital gaming production in New York State were included in the adopted SFY 16 Budget, but unfortunately, it now appears that those incentives fail to provide any real boosts to these industries The bill would remove the in hoped-for industry support from the Excelsior program, and support production activities occurring in the State. The need for a functioning incentive program can be seen in that New York currently only generates a tiny fraction, estimated at less than four percent, of the $17 billion U.S., and less than two percent of the $55 billion global music production industry. Unfortu- nately, in digital gaming New York currently fares even worse, with only one percent of the U.S. $25 billion industry, and an insignificant blip of the $70 billion worldwide gaming industry. What is truly disconcert- ing. about these numbers is that New York is undoubtedly the home of the most creative individuals in the music industry, and graduates the finest game developers anywhere. We need robust and accessible programs to encourage these creative geniuses to work and perform in the State, for industries that have a potential for exponential growth both in Down and UpState.
Aiding either of these programs through the Excelsior template has been seen as being nearly impossible, and no one is aware of any claims for credits for the two industries since they were placed in Excelsior last year. Consequently, both industries have approached the Legislature for different, more strategic and easier to access programs.
This bill has received universal support from the music and gaming industries. The bill provides for a true "below the line" production credits that will exponentially grow these industries in New York, and create employment while not providing taxpayer funds for "stars and directors". In order to not to place any strains on the State budget, the credit for both industries is capped at $50 million a year for each industry.
The bill also provides for strong reporting requirements to determine if the incentives will produce significant company revenue and permanent employment growth in the State.
Legislative history
2015-16:S. 4072-B/A.10083: Veto 255 2017-18: S 3159-A /A2670-B
Fiscal implications
Up to $100 million a year in tax expenditures.
Local fiscal implications
None
Effective date
Immediately and shall apply to taxable years beginning on or after Janu- ary 1, 2020 and before January 1, 2025 provided that sections one through eight of this act shall expire and be deemed repealed December 31, 2024.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.