Disabled Access Tax Credit
Disabled Access Tax Credit (Title 26, Internal Revenue Code, Section 44) - This tax credit is available to "eligible small businesses" in the amount of 50% of "eligible access expenditures" that exceed $250 but do not exceed $10,250 for a taxable year. A business may take the credit each year that it makes eligible access expenditure.
Eligible small businesses are those businesses with either:
- $1 million or less in gross receipts for the preceding tax year; or,
- 30 or fewer full-time employees during the preceding tax year.
Eligible access expenditures are amounts paid or incurred by an eligible small business to comply with the applicable requirements of the Americans with Disabilities Act (ADA). These include amounts paid or incurred to:
- remove architectural, communication, physical, or transportation barriers that prevent a business from being accessible to, or usable by, individuals with disabilities;
- provide qualified readers, taped texts, and other effective methods of making orally delivered materials available to individuals with visual impairments;
- materials available to individuals with hearing impairments;
- acquire or modify equipment or devices for individuals with disabilities; or
- provide other services, modifications, materials or equipment, including job coach services.
Expenditures that are not necessary to accomplish the above purposes are not eligible. Expenses incurred during new construction are not eligible.
"Disability" has the same meaning as it does in the ADA. To be eligible for the tax credit, barrier removals or the provision of services, modifications, materials or equipment must meet technical standards of the ADA Accessibility Guidelines where applicable. These standards are incorporated in Department of Justice regulations implementing Title III of the ADA (Department of Justice - 28 CDR Part 36; 56 CDR 35544, July 26, 1991).
Example - Company A purchases equipment to meet its reasonable accommodation obligation under the ADA for $8,000. The amount by which $8,000 exceeds $250 is $7,750. Fifty percent of $7,750 is $3,875. Company A may take a tax credit in the amount of $3,875 on its next tax return.
2nd Example - Company B removes a physical barrier in accordance with itís reasonable accommodation obligation under the ADA. The barrier removal meets the ADA Accessibility Guidelines. The company spends $12,000 on this modification. The amount by which $12,000 exceeds $250 but not $10,250 is $10,000. Fifty percent of $10,000 is $5,000. Company B is eligible for a $5,000 tax credit on its next tax return.
To claim the credit, the employer files IRS form 8826, Disabled Tax Credit.