Digital Interactive Media and Software Program
Louisiana’s Digital Interactive Media and Software Program, statutorily known as Digital Interactive Media and Software Tax Credit — the strongest of its kind in the nation — is helping innovative digital media and software development companies of all sizes gain a competitive edge.
Eligibility
The incentive is open to all companies producing digital interactive media products or platforms in Louisiana. Certain exclusions apply, such as static internet websites or software primarily designed for internal use, which are non-qualifying. Only work physically performed in Louisiana and only direct development equipment purchased through Louisiana businesses qualifies for the incentive.
Qualifying development products include:
- Digital Media and Games
- Web-based and Mobile Applications
- Consumer Software
- Entertainment Software
- Business and Enterprise Software
- Interactive Devices and Consoles
- Embedded Systems
What qualifies as a Louisiana business?
- Registered with the Secretary of State
- Physically located in Louisiana
- Posted hours of business
- At least one full-time employee
Note: Eligible expenditures may start as early as, or no later than, six months from initial certification date (acceptance into the program) — R.S. 47:6022.
Eligible Labor Expenses
- Project Managers
- Quality Assurance
- Engineers
- Programmers
- Game Designers
- Industrial Designers
- Composers
- Artists
- Management R&D/Engineering
Eligible Production Expenses
- Production equipment directly related to development (Hardware/Software)
- Allocated rent for where direct development occurs
- Office supplies (related to development)
- Licenses/permits for development
Non-Eligible Labor Expenses
- Customer Service Staff
- Business Development/Sales Staff
- Assistants/Secretaries
- Marketing/PR Staff
- Accounting/Financial Staff
- Clerical Staff
- Installation Staff
- Janitorial/Maintenance Staff
- Human Resources
- Miscellaneous Administrative/Payroll
- Manufacturing Staff
Non-Eligible Production Expenses
- Furniture and fixtures
- Relocation expenditures
- Domain license fees
- Hosting
- Payroll processing fees
- Indirect production equipment (Hardware/Software)
- Entertainment expenditures
- Communications (telephone, cell phone, etc.)
- Utilities
- State/local taxes
- Advertisements
- General insurance for business operations
- Interest paid on loans
- Auto rental/mileage
- Parking/fare expenditures
- Travel expenditures
- Internet
- Food
- Recruiting/hiring expenditures
- Manufacturing expenditures
- Lodging/housing of staff
Eligibility Scenarios
My company recently applied to the program and I have a very large development project with work dating back to 2005. Can I collect tax credits on expenses dating back to 2005?
NO. The initial certification letter shall be effective for qualifying expenditures no earlier than six months from date of application. Qualifying expenditures can only begin six months from the date of initial certification.
My company is planning to develop a project that will involve image files, music files and video files. Are the costs associated eligible expenditures?
Content including image files, music files and video files may be eligible expenditures in the development stage up to the commercial release of the product; however, updates to content after the commercial release of the product are non-eligible expenditures.
My company is planning to develop a Software as a Service (SAAS) application. Part of the project involves an entirely new distribution network and several servers to run the service. Are the costs associated with purchasing this equipment eligible expenses?
NO. Eligible equipment includes equipment that is used entirely for the development of the product. Equipment used to distribute the product is considered non-eligible equipment because it is considered outside the development stage.
The Process
Certifications
Initial Certification
- The applicant submits an application, fee, production verification report deposit and preliminary budget to OEID. The preliminary budget should describe all the expenditures related to the development of the project. View chart >
The application fee is calculated at 0.005 x proposed tax benefit with a minimum fee of $500 and a maximum fee of $15,000.Prior to issuance of initial certification, the applicant shall submit to the office a deposit of the expenditure verification report fee of $7,500 for a production with qualified production expenses projected to be no more than $1 million, and a deposit of $15,000 for those projected to be in excess of $1 million.
The applicant will be assessed the actual cost for the expense verification report fee. The maximum fee for the report shall be $15,000 for verification of a cost report reflecting production expenses of up to $1 million dollars, and the maximum fee shall be $25,000 for verification of a cost report reflecting production expenses in excess of $1 million. - The application, fee and preliminary budget are received by OEID, and the applicant is notified via email that both were received.
- The application and preliminary budget are reviewed for completeness, and the applicant is then sent a standard list of compliance questions.
- The application, preliminary budget and compliance questions are reviewed by OEID staff. Applicant will be contacted to discuss any follow-up that’s needed to determine eligibility.
- Once approved, an initial certification letter is sent to the applicant.
Final Certification
- Company notifies OEID that they are ready to proceed to certification of credits. (This step occurs after actual expenditures occur and at a time frame determined by the applicant — upon project completion, or no more than once per calendar year.)
- OEID shall assign the CPA to perform the cost report review and provide a report to OEID and the applicant.
- Documents are then reviewed by OEID staff and additional documentation may be requested at this step.
- Once approved by the Director of Digital Media, the tax credit certification is then issued to the applicant.
- Applicant can claim the tax credit to offset any state income tax liability and the state will refund any overages OR applicants can opt to transfer the credit to the state at 85%. In order to receive a refund of any overpayment of taxes due, LDR can provide additional guidance.
Digital Interactive Media and Software Program FAQs
What is Digital Interactive Media?
In the context of Louisiana’s Digital Interactive Media program, it’s essentially an interactive software product (e.g. video game, training software, web platform, etc.) that’s built for commercial export and not for the producer’s internal use.
Is Louisiana's Digital Interactive Media Incentive a grant program?
NO. It is an incentive that awards state tax credits to producers of Digital Interactive Media.
What's a tax credit?
A tax credit is a credit that can be used against Louisiana tax liability. In the case of the Digital Interactive Media program, it’s a credit with an option for an 85% rebate.
What can I do with the tax credits once I receive them?
Firstly, you can cover your Louisiana state tax liability. Since the credits awarded in the Digital Interactive Media Program are refundable, the remainder of the credits are considered an overpayment and refunded to the applicant by the Department of Revenue. There is also an option to take the value of the credits as a one-time rebate (any time during the year) at 85% of their original value.
Will I need to hire anyone to help me apply for the program?
OEID has full-time staff members whose job it is to help companies through the process of applying for and receiving the Digital Interactive Media tax credit. We strive to continually improve the transparency and ease with which firms can apply and enter the program.