As far as indie devs, yes, but in the greater scheme of things that is still fairly pittance money. $180k pre-tax split two ways, and then eaten into heartily by health insurance (Tarn and his brother have mentioned that medical issues are what pushed them to do the Steam release) doesn't leave a whole lot.
But that also means that as long as they don't significantly increase the cost of their lifestyle, that $7m pre-tax will go a very long way.
It sucks that their tax burden is going to be higher on account of making all this money in a single year, putting almost all of it in the highest brackets. Unless they did some clever accounting tricks throughout the 20 years to prepare for this situation, which I highly doubt they did.
I don't know where he lives, but in California it could easily add up to close to 50% since he's "rich".
As far as I know, they live in Washington state. Which should help with the tax on income at least a little bit, given the state has no income tax.
Still, yeah, having the entire amount being dropped on them in a single year will probably have pretty major federal income tax consequences. Hopefully, they will figure it out, and the sales of Dwarf Fortress on steam won't dwindle. I find that it is a pretty good timing for the release, given that Rimworld (the spiritual competitor) has gone extremely mainstream, so people are definitely more open these days to that type of games.
i'd thought the standard way would be to borrow heavily and invest in other financial assets. Then the interest payment would be paid out pre-tax, thus reducing your tax liabilities down to a manageable level.
The financial assets will return money in the future, but much more slowly, and get preferential tax treatment compared to direct income (such as long term capital gains tax discounts).
When you have $7mil in cash (and expectation of more in the future), there would be options not available to lower net worth people i suppose?
But that also means that as long as they don't significantly increase the cost of their lifestyle, that $7m pre-tax will go a very long way.