Federal Tax Incentives: Disabled Access Credit
Background
The Disabled Access Credit under 26 U.S.C. § 44 of the Internal Revenue Code (IRC) provides a nonrefundable credit to help eligible small businesses offset costs of Americans with Disabilities Act (ADA) compliance. The credit equals 50% of eligible access expenditures over $250, up to $10,250—maximum annual credit $5,000. See § 44(a); IRS Form 8826 Instructions.
Eligibility requires either (§ 44(b)(1)(A)–(B)):
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(i) gross receipts ≤ $1 million in the preceding tax year or
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(ii) no more than 30 full‑time employees (≥ 30 hours/week for ≥ 20 weeks).
Eligible Access Expenditures:
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Includes removing architectural, communication, physical, or transportation barriers (§ 44(c)(2)(A));
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Providing qualified interpreters or other effective methods for hearing‑impaired individuals (§ 44(c)(2)(B));
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Providing qualified readers, taped texts, or other effective methods for visually impaired individuals. (§ 44(c)(2)(C)); or
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Acquiring or modifying equipment or devices for individuals with disabilities (§ 44(c)(2)(D)).
Key Exclusions and Standards
All expenditures must be reasonable and necessary and must meet the standards issued by the Secretary of the Treasury in concurrence with the Architectural and Transportation Barriers Compliance Board. § 44(c)(3), (c)(5). Expenses incurred for new construction are not eligible. § 44(c)(4).
Disability Definition
“Disability” has the same meaning as under the ADA (42 U.S.C. § 12102(1)–(3)):
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a physical or mental impairment substantially limiting major life activities;
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In general, major life activities include, but are not limited to, caring for oneself, performing manual tasks, seeing, hearing, eating, sleeping, walking, standing, lifting, bending, speaking, breathing, learning, reading, concentrating, thinking, communicating, and working.
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Major life activities may also include the operation of a major bodily function, including but not limited to, functions of the immune system, normal cell growth, digestive, bowel, bladder, neurological, brain, respiratory, circulatory, endocrine, and reproductive functions.
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a record of such impairment; or
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being regarded as having such impairment.
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42 USC § 12102(c)(3) provides an individual meets the requirement of "being regarded as having such an impairment" if the individual establishes that he or she has been subjected to an action prohibited under this chapter because of an actual or perceived physical or mental impairment whether or not the impairment limits or is perceived to limit a major life activity. However, this shall not apply to impairments that are transitory and minor. A transitory impairment is an impairment with an actual or expected duration of 6 months or less.
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