What is the ADA Tax Credit
The U.S. government promotes and supports accessibility practices that comply with the Americans with Disabilities Act (ADA) by incentivizing the efforts made and sustained with a tax credit (a credit is an amount subtracted from your overall liability after calculating your taxes). You can receive up to $5,000 a year in tax credits and reduce your overall prices.
The tax credit, listed under Section 44 of the IRS Code, covers 50% of the eligible access expenditures made during the previous tax year, with a maximum expenditure limit of $10,250. There is no credit for the first $250 of the expenditures, so it is subtracted accordingly. Therefore, the highest amount of credit a business can receive is $5,000.
For example, if you spend $490 on accessWidget, after removing $250 (as there is no credit for the first $250 of the expenditures), you are eligible for a 50% credit for the remaining $240. Hence, you can receive $120 in tax credits, which means you would only pay $370 a year for the accessWidget.
What businesses are eligible for the ADA Tax Credit?
The ADA tax credit benefit is available to businesses that meet one of the following conditions:
1. The business generated $1,000,000 or less during the year before filing.
2. The business employs 30 or fewer full-time employees.
How to apply for the ADA Tax Credit
Once you have confirmed that your business is eligible, you can fill out Form 8826 to apply. It must then be attached to their yearly tax return and sent alongside it. You can find Form 8826 on the IRS government website, where you can also research the rules and stipulations regarding the tax credit itself.
More instructions can also be found on page 2 of Form 8826. You can also read more on the IRS Tax Credits and Deductions page on the Americans with Disabilities Act website.