Game or app developer taxes and deductions

This got better for 2026 and it matters more here than almost anywhere. Development work done in the United States is deductible in the year you pay for it again, rather than being spread across five years the way it was for the last few. Work done abroad still has to be spread, over fifteen.

For a studio spending most of its money on people, that is the difference between a deduction now and a deduction mostly in future years you may not reach. You can still elect to spread domestic costs over at least sixty months if a loss is no use to you this year. Platform revenue shares are not your income, what the store keeps never reaches you. But read the statement, because some report gross and some net. Contractors paid $600 or more in a year need a 1099-NEC from you.

The deductions with a rule attached

These are the lines where the answer is not simply "keep the receipt"each has a cap, a percentage or a test that decides how much of the spend you actually get:

Computer: Section 179 property. Deduct the whole cost in the year it goes into service rather than spreading it over the asset's life, up to $2,560,000 a year, and 100% bonus depreciation is now permanent. The catch is the business-use test: anything used more than 50% for the business qualifies, and you deduct at that percentage rather than the full price. So anything you also use at home comes off at the share that is genuinely work, not the whole invoice.
Equipment: Section 179 property. Deduct the whole cost in the year it goes into service rather than spreading it over the asset's life, up to $2,560,000 a year, and 100% bonus depreciation is now permanent. The catch is the business-use test: anything used more than 50% for the business qualifies, and you deduct at that percentage rather than the full price. So anything you also use at home comes off at the share that is genuinely work, not the whole invoice.
Home office: Two methods. Simplified is $5 a square foot to a ceiling of 300 feet, $1,500, no records beyond the measurement, and no depreciation recapture when you sell the house. Actual apportions your rent or mortgage interest, utilities, insurance and repairs by floor area, usually gives more, and does bring recapture. Either way: space must be used regularly and exclusively for business. home office must be principal place of business.
Professional development: Courses that sharpen work you already sell are the clearest case there is. Spending on professional development to stay current is deductible; the training that qualified you to start is not. The test is about where you are, not what the course teaches, which is why the identical enrollment fee can be deductible for you and not for the person sitting beside you.

The rest of the game or app developer deduction list

Ordinary and necessary business expenses, deductible in full in the year you pay them, provided they are genuinely for the business:

Software subscriptions
Subcontractors you pay
Marketing
Platform fees

Worth knowing

Development costs are deductible again in the year you incur them, provided the work is done in the United States.

That is what is specific to this trade. The larger deductions are the universal ones, see the full checklist.

What each deduction is worth to you

On $100,000 of profit with no state income tax, $1,000 deducted saves $305, 30.5%, because it comes off self-employment tax and income tax together:

Net profit	Saved per $1,000 deducted	Effective
$40,000	$231	23.1%
$100,000	$305	30.5%
$200,000	$297	29.7%

The last row is worth less than the one above it, and that is not a mistake: past the Social Security wage base the self-employment part of the saving drops from 15.3% to 2.9%, and the higher income-tax bracket does not quite make up the difference. A deduction is worth most in the middle.

Add a state income tax and every row rises. The 1099 calculator applies that layer.

Where this comes from

The rules on this page that are specific rather than general are cited below. Follow a link to read the provision itself rather than taking our word for it:

Domestic research and experimental expenditures are deductible when paid or incurred, with an election to amortize over at least 60 monthsIRC 174A
Foreign research and experimental expenditures remain capitalized over 15 yearsIRC 174, as amended by P.L. 119-21 sec. 70302

What these words mean

1099-NEC: The form a client sends you, and the tax office, when they have paid you $600 or more in a year for work. You owe the tax on that income whether or not the form ever arrives.
Section 179: A rule letting you deduct the whole cost of equipment in the year you start using it, instead of spreading it over the years you own it.
Depreciation: Spreading the cost of something long-lasting, a vehicle, a camera, a tractor, across the years you use it, rather than deducting it all at once.
Depreciation recapture: When you sell something you had been depreciating, the tax office takes back part of the benefit by taxing the gain up to the amount you already deducted.

General information about how these deductions work, not tax advice. Whether a particular expense is deductible for you depends on facts this page does not have, check with a tax professional before claiming anything listed here.