However, this is business income, not compensation, so it's taxed on a net basis, not a gross basis (even though it may still be included on his personal income tax return). This means his taxable income is the amount left after taking into account the retailer's fees, subcontractor costs, etc.
So, for example, if he made $100 selling games, $30 would go to the store. Assuming no expenses and overhead (since we have no data to come up with those numbers), the remaining $70 would be subject to tax. Assuming he lived in NYC, he would pay up to $36.26 in combined taxes (not taking into account the SALT deduction or the progressive tax rate calculation), for a post-tax net of at least $33.74. Assuming he lived in WA as other commenters note, he would pay up to $25.9 in federal taxes, for a post-tax net of no less than $44.1. (But note: Washington has an excise tax on businesses which is based on gross income...)
It pays to be the middle man!
Generally, the Steam cut is considered “fair” for Indy devs. The benefits of steam (discoverability, massive audience) generate more sales. My Indy dev friends are not upset about the steam cut at all.
This, however, is one area where eventually Epic Games shines — they take a much lower cut and if they increase in popularity with gamers then steam might be forced to lower their share.
This is basically almost public information: 25% cut on earnings between $10 million and $50 million.
Yet most likely very big share of sales is well below $10 let alone $15 due to sales and regional pricing.
So yeah I doubt numbers anywhere close to those adverised.
> Generally, the Steam cut is considered “fair” for Indy devs. The benefits of steam (discoverability, massive audience) generate more sales. My Indy dev friends are not upset about the steam cut at all.
Steam no longer provide any discoverability on its own unless you either bring your own community ftom outside or spend $10,000-100,000 on marketing to gain wishlists.
If you're small 2-10 people indie gamedev studio and have external funding Valve will earn more from your game than you.
It's probably the big name studios who already have entire departments to do that kind of stuff that feel they're being ripped off.
Truly? I believe he lives in Washington State. It's really HALF of his income?
Just checked, seems it's now 37% for the top federal bracket... for what it's worth, I think it's amoral to tax more than half of what someone makes, regardless of how much they make.