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Accessibility ADA Tax Credit
Can small businesses receive tax benefits for making their websites accessible to people with disabilities? The simple answer is, yes!
But if it’s taxed, it’s complicated; so let us simplify the maze of tax complexity for you.
In order to incentivize businesses to adhere to ADA compliance requirements, the U.S. government decided to help businesses that attain accessibility requirements, including for their websites.
Section 44 of the IRS Code allows a tax credit for small businesses while Section 190 of the IRS Code allows a tax deduction for all businesses.
The difference between a tax credit and a tax deduction is that a tax credit is subtracted from what you owe in taxes (after calculating your taxes), while a tax deduction is subtracted from your total income before calculating your taxes. In other words, a tax deduction is applied to your taxable income.
This tax credit was created in 1990 specifically to aid small businesses to cover ADA-related “eligible access expenditures.”
According to the ADA Title III fact sheet, “A business that for the previous tax year had
either revenues of $1,000,000 or less or 30 or fewer full-time workers may take advantage of this credit.” This credit can be claimed against any effort to provide access to individuals with impairments, including expenses on website accessibility.
Now here is where it gets tricky. This credit can cover 50 percent of the eligible access expenditures in a year up to $10,250, with the first $250 excluded from credit (maximum credit of $5,000).
How does this exactly work?
Let’s say a business spent $7,000 on accessibility for its website. The first $250 isn’t credited, so 50 percent of $6,750 would be $3,375 in tax credit.
Let’s demonstrate with another example. A business invested $20,000 in accessibility services on its website. This business can only use up to $10,250 of its expenditures for the tax credit, leaving it with $5,000 in credit (after subtracting the first $250).
NOTE: While this tax credit cannot be used in other tax credits when filing your tax return, it’s not limited to a one-time credit. As long as your website meets accessibility standards you can use this credit each year.
ADA Tax deductions
The tax deduction is available to all businesses with a maximum deduction of $15,000 per year. However, it does not apply to website accessibility expenditures but rather to architectural alterations.
It is best advised to infer both tax credit and deduction benefits from a tax professional before laying out your business plan. In addition, some accessibility tax benefits may exist at the state level so we encourage you to further inquire into that according to your location.
Claim your tax credit
To claim a tax credit for accessibility enhancements for your website, use IRS Form 8826.
Please note that EqualWeb is not a tax consultancy firm as this informative page should not replace your responsibility to consult an accountant or tax professional. We do not take any responsibility for misrepresented or misunderstood information, or changes to information amended by the law.
Learn how to use web accessibility to your tax advantage!
Our web accessibility certified specialists can help you get all the information you need for taking advantage of the tax deduction and benefits options.
Frequently Asked Questions
Do I get tax deductions for web accessibility?
In short, no. But you do get tax benefits in the form of a tax credit each year, which can save you significant revenue.
How do I claim my tax credit?
To claim a tax credit for accessibility enhancements for your website, use IRS Form 8826.
How do I get tax benefits for website accessibility expenditures?
Section 44 of the IRS Code allows a tax credit for small businesses while Section 190 of the IRS Code allows a tax deduction for all businesses (but this does not apply to website accessibility expenses).
How does the tax credit work?
Tax credit for web accessibility expenditures can cover 50% of the eligible access expenditures in a year up to $10,250, with the first $250 excluded from credit (maximum credit of $5,000). For example, if a business spent $7,000 on accessibility for its website, the first $250 will not be credited. So 50% of $6,750 would amount to $3,375 in tax credit.
Is the web accessibility tax credit limited?
No, it’s not! Although this tax credit cannot be used in other tax credits when filing your tax return, it’s not limited to a one-time credit. As long as your website meets accessibility standards you can use this credit each year.
What is the difference between tax deductions and tax benefits?
The difference between a tax credit and a tax deduction is that a tax credit is subtracted from what you owe in taxes (after calculating your taxes), while a tax deduction is subtracted from your total income before calculating your taxes. In other words, a tax deduction is applied to your taxable income.
Who can apply for a tax credit?
According to the ADA Title III fact sheet, “A business that for the previous tax year had either revenues of $1,000,000 or less or 30 or fewer full-time workers may take advantage of this credit.” This credit can be claimed against any effort to provide access to individuals with impairments, including expenses on website accessibility.
