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Fact Sheet 4
Tax Incentives for Improving Accessibility
Two tax incentives are available to businesses to help cover the cost of
making access improvements. The first is a tax credit that can be used for
architectural adaptations, equipment acquisitions, and services such as sign
language interpreters. The second is a tax deduction that can be used for
architectural or transportation adaptations.
(NOTE: A tax credit is subtracted from your tax liability after you
calculate your taxes, while a tax deduction is subtracted from your total
income before taxes, to establish your taxable income.)
Tax Credit
The tax credit, established under Section 44 of the Internal Revenue Code,
was created in 1990 specifically to help small businesses cover ADA-related
eligible access expenditures. 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. The credit can be used to cover a variety of
expenditures, including:
- provision of readers for customers or employees with visual disabilities
- provision of sign language interpreters
- purchase of adaptive equipment
- production of accessible formats of printed materials (i.e., Braille,
large print, audio tape, computer diskette)
- removal of architectural barriers in facilities or vehicles (alterations
must comply with applicable accessibility standards)
- fees for consulting services (under certain circumstances)
Note that the credit cannot be used for the costs of new construction. It
can be used only for adaptations to existing facilities that are required to
comply with the ADA.
The amount of the tax credit is equal to 50% of the eligible access
expenditures in a year, up to a maximum expenditure of $10,250. There is no
credit for the first $250 of expenditures. The maximum tax credit, therefore,
is $5,000.
Tax Deduction
The tax deduction, established under Section 190 of the Internal Revenue
Code, is now a maximum of $15,000 per year a reduction from the $35,000 that
was available through December 31, 1990. A business (including active
ownership of an apartment building) of any size may use this deduction for the
removal of architectural or transportation barriers. The renovations under
Section 190 must comply with applicable accessibility standards.
Small businesses can use these incentives in combination if the
expenditures incurred qualify under both Section 44 and Section 190. For
example, a small business that spends $20,000 for access adaptations may take
a tax credit of $5000 (based on $10,250 of expenditures), and a deduction of
$15,000. The deduction is equal to the difference between the total
expenditures and the amount of the credit claimed.
Example: A small business' use of both tax credit and tax
deduction
$20,000 cost of access improvements (rest room, ramp, 3 doors
widened)
- $5,000 maximum credit
$15,000 remaining for deduction
Annual Incentives
The tax credit and deduction can be used annually. You may not carry over
expenses from one year to the next and claim a credit or deduction for the
portion that exceeded the expenditure limit the previous year. However, if the
amount of credit you are entitled to exceeds the amount of taxes you owe, you
may carry forward the unused portion of the credit to the following year.
For further details and information, review these incentives with an
accountant or contact your local IRS office or the national address below.
Contact your tax professional for more information
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