The ADA requires small businesses to make their physical and digital spaces accessible to every visitor and employee just like large corporations. But small businesses may have smaller budgets and tackling issues like digital accessibility can be financially burdensome. To make improving accessibility more affordable and more attractive to small businesses, the federal government offers two different tax incentives.
Two tax incentives to make accessibility affordable
Disabled Access Credit
IRS Code Section 44, Disabled Access Credit, allows small businesses to receive a credit for up to 50% of their ADA-related expenses above $250 but under $10,000, for a total of $5,000 in credit. This credit applies only to small businesses with fewer than 30 employees or less than $1,000,000 in revenue for the filing year. This incentive is a credit, deducted from the amount of taxes you owe.
According to the ADA, this Credit can apply to a number of different accessibility projects such as:
provision of readers for customers or employees with visual disabilities
provision of sign language interpreters
purchase of adaptive equipment production of accessible formats of printed materials (i.e., braille, large print, audio tape, computer diskette)
removal of architectural barriers in facilities or vehicles (alterations must comply with applicable accessibility standards)
fees for consulting services (under certain circumstances)
Tax Deduction to Remove Architectural and Transportation Barriers
The other incentive is the Tax Deduction To Remove Architectural And Transportation Barriers To People With Disabilities And Elderly Individuals (Title 26, Internal Revenue Code, section 190) (the Deduction). This Deduction exclusively applies to the removal of accessibility barriers in architecture and transportation by any size business. Those who own or lease buildings or vehicles in connection with their business are eligible to deduct up to $15,000 annually to make them more accessible to those who have disabilities. This incentive is a deduction, deducted from your company’s taxable income, meaning you’ll be taxed on less of your earnings.
How the incentives are different
There are two main differences between the Disabled Access Credit (the Credit) and Tax Deduction To Remove Architectural And Transportation Barriers To People With Disabilities And Elderly Individuals (Title 26, Internal Revenue Code, section 190) (the Deduction). First, the Credit only applies to small businesses, defined as organizations that employed fewer than 30 full-time employees or made less than $1,000,000 in revenue during the year for which they are filing. The Deduction applies to any organization. Second, the Credit applies to a much broader range of accessibility projects, not just architectural and transportation updates.
Which incentive applies to your accessibility project?
If your small business has added ramps, lowered counter height, and installed accessible bathrooms but still hasn’t assessed website accessibility, the tax Credit can make it more affordable. Because it applies to more than just physical accessibility barriers, your company can apply the Credit to projects like web accessibility. Both incentives can be used during the same filing period. So if you’ve spent thousands of dollars installing automatic doors, you can claim the Deduction for that portion of your accessibility efforts. Then if you spent an additional several thousand making sure your website and its documents are accessible, you can claim the tax Credit for that project.
The IRS has more helpful information about tax-deductible business expenses here.
Ready to tackle your PDF remediation project so you can deduct it on your next tax return? Contact Equidox!