ADA Tax Benefits Explained (Including Eligibility)
Small businesses with gross receipts of one million dollars and less or those that employ 30 or fewer employees are eligible for the ADA tax credit. Use IRS Form 8826 for these tax benefits (the Disabled Access Credit), and reference Title 26, Internal Revenue Code, Section 44. Tax credits differ from tax deductions—a deduction reduces taxable income and, therefore, the tax owed. Conversely, a tax credit gets subtracted from the tax owed later in the process. For example, you can take a 50% credit up to $10,250 for expenditures over $250, resulting in a $5,000 maximum credit.
See the terms for claiming the Disabled Access Credit below:
- Example 1: Your company spends $5,000 on an accessibility audit or enhancing your website’s accessibility. Only expenditures over $250 qualify, so subtract $250 from $5,000 to get $4,750. You can claim 50% of that amount as a tax credit. In other words, you can subtract $2,375 from the amount owed on your next tax return.
- Example 2: Your company spends $12,000 on an accessibility audit or enhancing your website’s accessibility. You exceed the $10,250 limit, $10,000 of which you can claim. The 50% tax credit, then, comes out to $5,000.
What is Accessibility?
Small businesses incur certain costs when they install a wheelchair ramp, provide a sign language interpreter for an event, or offer print materials in Braille. Tax benefits for accessibility help them with these costs. But the tax benefits also extend to websites, which can be hugely important for people with disabilities. So creating a barrier-free internet is critical, and giving businesses an incentive to make digital accessibility a priority is a welcomed initiative.
The truth is most websites are not highly accessible. They contain obstacles for users with various disabilities. Enhancing a website’s accessibility also involves costs, particularly when retrofitting an existing website instead of building a new one with accessibility in mind. The same tax benefits that apply to accommodations like wheelchair ramps also apply to websites and can help site creators with the associated costs.
Why Accessibility Matters Beyond the Tax Incentives
ADA tax credits are undoubtedly advantageous for businesses, especially smaller organizations with fewer resources. But web accessibility goes well beyond tax deductions and tax incentives. An accessible website can provide a legal safety net, elevate online retail performance and provide inclusivity for people with disabilities.
And accessibility has never been more urgent as federal courts increase related lawsuits against non-compliant companies. Moreover, your company is vulnerable no matter how small you may think it is. Not just the Fortune 500 players face punitive action, and smaller businesses are even less prepared to absorb related costs.
On the positive side, an accessible website empowers you to welcome the 61 million American adults who have disabilities, which represents an $8 trillion global market.
Count on UserWay for Your Accessibility Needs
Unfortunately, most websites aren’t accessible in today’s world, and people with disabilities are the ones who suffer. But UserWay’s AI-Powered Accessibility Solution can help you improve accessibility and compliance affordably. Of course, small businesses can always use a break financially, especially if you’re at the beginning of the web development process. Regardless of where you are in your journey, the ADA tax credit can provide some much-needed help.