B.C. renews digital media tax credit, increases it to 25 percent

The Government of British Columbia has made its Interactive Digital Media Tax Credit (IDMTC) permanent and increased it from 17.5 to 25 percent.

The increase, which will go into effect in September 2025, was announced as part of the province’s 2025 budget. This sort of funding aids those working in the video game, VR/AR and educational software industries.

Specifically, the government says it intends for the tax credit to “help companies attract the talent they need to grow their teams and compete for more contracts, strengthening a robust and sustainable industry.”

Tax credits like these have been a particular boon for Canada’s video game industry, with most provinces offering such financial incentives to encourage developers to do business in them. This has helped Canada’s gaming sector become a $5.1 billion powerhouse, according to recent data from the Entertainment Software Association of Canada (ESAC).

With nearly 11,000 employees across 146 studios, B.C. is Canada’s third-largest province for game development, after only Quebec and Ontario, per the ESAC. Some of the notable studios in B.C. include EA Vancouver (behind the top-selling EA Sports and NHL series), Xbox-owned The Coalition (Gears of War), Nintendo-owned Next Level Games (Luigi’s Mansion 3), Kabam (Marvel Contest of Champions), Extremely OK Games (Celeste) and Sunset Visitor (1000xResist), all of which are in Vancouver.

The renewal and expansion of B.C.’s digital media tax credit comes amid a particularly challenging time for the video game industry, with many layoffs and studio closures happening worldwide over the past couple of years. In Canada, the number of “micro studios” (those with two to four employees) fell 25 percent to 341 between 2021 and 2024, per the ESAC. B.C., in particular, saw 35 percent of these small teams dealing with either complete shutdown or downsizing during this period.

Image credit: EA

Source: Government of British Columbia