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ADA Compliance Tax Incentives

There is a federal tax credit available to cover 50% of the cost of accessibility upgrades, including consultant costs, for small businesses. We regard much of the legal work that we do for our clients as consulting on the rules and regulations that govern what, if anything, needs to be done. Please check with your tax accountant to see what portion, if any, of such legal fees can be offset by these tax credits.

If ADA modification plan includes $10,000 worth of work each year over a period of years, more than 50% of all costs will be refunded in tax credits and deductions. As mentioned, consult your accountant for applications to your business, and provide them with a copy of this article as many accountants may not be aware of these credits.

Tax credit – The maximum credit per year is $5000. The tax credit is for small businesses that remove access barriers from their facilities, provide accessible services, or take other steps to improve accessibility for customers with disabilities. Small businesses with 30 or fewer employees or total revenues of $1 million or less can use the disabled access credit (See: Internal Revenue Code, Section 44). Eligible small businesses may take a credit of up to $5,000 (half of eligible expenses up to $10,250, with no credit for the first $250) to offset their costs for access, including barrier removal from their facilities (e.g., widening a doorway, installing ramps, restriping and consulting fees in relation to these changes), provision of accessibility services (e.g., sign language interpreters), provision of printed material in alternate formats (e.g., large-print, audio, Braille), and provision or modification of equipment.

Tax deduction – In addition, up to $15,000 worth of accessibility upgrades can be deducted in the year the work is done as opposed to being depreciated over many years as with typical capital improvements. There is a tax deduction for businesses of all sizes that remove access barriers in their facilities or vehicles. A business that annually incurs eligible expenses to bring itself into compliance with the ADA may use these tax incentives every year. The incentives may be applied to a variety of expenditures; however, they may not be applied to the costs of new construction. All barrier removal must comply with applicable federal accessibility standards.