There are several valuable tax incentives available to employers to help offset the costs of accommodating employees with disabilities and to make their places of business accessible.

Disabled Access Credit

Internal Revenue Code (IRC or the Tax Code) Section 44 provides a disabled- access credit for eligible small businesses. Small businesses may take an annual tax credit for making their businesses accessible to persons with disabilities. Eligibility requires two things, namely, that the business taxpayer is actually eligible in the year that the credit is claimed and that it has made an actual access expense that same year. Also, the small business must have earned less than $1 million in revenue or had 30 or fewer full-time employees in the previous year.

The credit is worth 50% of expenditures over $250, not to exceed $10,250, for a maximum benefit of $5,000. The credit amount is subtracted from the total tax liability.
Making this credit very attractive, it is available every year and can be used for a variety of costs such as:
• Sign language interpreters for employees or customers who have hearing impairments;
• Readers for employees or customers who have visual impairments;
• The purchase of adaptive equipment or the modification of equipment;
• The production of print materials in alternate formats (for example, Braille, audio tape, large print); and

• The removal of barriers in buildings and transportation that prevent a business from being accessible to or usable by individuals with disabilities.
Expenses must be paid or incurred to enable a small business to comply with the requirements of the Americans with Disabilities Act (ADA).
The tax credit does not apply to the costs of new construction, and a building that is being modified must have been placed in service before November 5, 1990. The credit is claimed on Internal Revenue Service (IRS) Form 8826.

Architectural/Transportation Tax Deduction

The deduction may not be used for expenses incurred for new construction, or for a complete renovation of a facility or public transportation vehicle, or for the normal replacement of depreciable property.

Small businesses may use the credit and deduction together, if the expenses incurred qualify under both IRC Sections 44 and 190. For example, if a business spent $12,000 for access adaptations, it would qualify for a $5,000 tax credit and a $7,000 tax deduction.

Although both the tax credit and deduction may be used annually, if a business spends more than may be claimed in one year, it cannot carry over those expenses and claim a tax benefit in the next year.