ADA Compliance Tax Credit

ADA Compliance Tax Credit

The Americans with Disabilities Act, also known as the ADA, was established in 1990 to outlaw discrimination against people with disabilities. Additionally, it creates guidelines or demands on businesses to provide specific accommodations for people with disabilities. People often think that ADA compliance only applies to physical business locations, but this also holds true for websites and eCommerce platforms. In order to encourage companies to take the required measures to comply with the ADA, the US government established the ADA Tax Credit.

In this guide, we’ll explore everything you need to know about the ADA tax credit in the context of web accessibility.

What is the ADA Tax Credit?

The Americans with Disabilities Act Standards for Accessible Design apply to ADA website compliance. It mandates that all digital content and tools, including your company's website, be usable by people with impairments. The requirement for a website to be ADA compliant applies to every single website that represents a business or is funded by one. 

Section 44 of the IRS Code allows for a tax credit for companies and Section 190 of the IRS Code permits a tax deduction for all businesses to help firms comply with the ADA. This is known as the ADA Compliance Tax Credit.

Businesses that had total revenues of approximately $1,000,000 or less in the preceding tax year, or thirty or fewer full-time workers, are eligible for the tax credit. This credit may be used to pay up to $5,000 (or 50% of the annual limit of $10,250) of qualified access expenses. The tax credit can be used to defray the expense of removing barriers and implementing accessibility-improving changes, offering accessible formats including a variety of font, color, or orientation adjustments that can be made to a website to make it readable for a variety of disabilities. All businesses are eligible for the tax deduction, which has an annual maximum deduction of $15,000. Tax deductions are available for costs associated with barrier removal and modifications.

The tax credit cannot be used for just anything. Specifically, it can be used to cut down the costs of adaptive equipment, make alterations to improve accessibility, improve website communication technology, and improve the accessibility of your website.

Being ADA compliant in the context of web accessibility can make it possible to receive this tax credit if your organization must be ADA compliant. When determining your annual accessibility fee, a number of accessibility factors must be taken into account. These factors include website page adjustments, page structure editing and hierarchy, robot chat or live chat support that makes the website more accessible, and accessible content and messaging. Paid services like media and file remediation are also considered an expenditure.

Am I Eligible for the ADA Tax Credit?

Businesses that had total revenues of $1,000,000 or less in the preceding tax year, or 30 or fewer full-time workers, are eligible for the tax credit. If your organization falls into either of these categories, is required to comply with the ADA, and your website has ADA-compliant elements, you are eligible to receive the ADA Tax Credit.

How to Apply for the ADA Tax Credit

Applying for the ADA Tax Credit is relatively straightforward. Start by tracking your expenditures. If you spent money outfitting your company with ADA-compliant items, you might be eligible to get some of that money back. It might not be the full $5,000, though. When you invest between $250 and $10,250 in specific eligible ADA expenditures throughout the course of a year, the tax credit will pay for 50% of your overall costs.

From there, ensure that you fall into the revenue and organizational requirements mentioned earlier in this guide. Now, you may download and fill out IRS Form 8826 so you can write down specific equipment or supply expenditures to get your tax credit. This form is due on the day and time when taxes are due, which would be April 15th, 2023. This form can be submitted with the rest of your tax forms.