Thanks to the Americans with Disabilities Act (ADA), individuals with disabilities are embracing a more vibrant and autonomous lifestyle within their communities. This federal law mandates that businesses, irrespective of their size, must offer reasonable accessibility to disabled individuals, empowering them to be active participants in society. Continue reading to explore funding options for small businesses to make ADA compliance modifications and foster inclusivity for all.
What is Accessibility?
Tax benefits support small businesses in covering costs for physical accessibility features like wheelchair ramps. However, it’s equally important to prioritize website accessibility. Most websites currently lack these features, creating barriers for users with disabilities. Enhancing website accessibility incurs expenses, but the same tax benefits that apply to physical accommodations can also assist with website modifications.
GOOD NEWS: For those building ADA compliant Websites
Small businesses investing in digital accessibility for people with disabilities have good news coming their way in the form of the ADA tax credit. This credit allows businesses to recoup some of the costs associated with implementing web accessibility. If your small business hasn’t yet prioritized ADA compliance, these tax incentives may sway your decision-makers to make the necessary changes.
Eligibility for the ADA tax credit is extended to small businesses with gross receipts of up to one million dollars or those employing 30 or fewer employees. To claim these tax benefits, you can use IRS Form 8826, also known as the Disabled Access Credit, and refer to Title 26, Internal Revenue Code, Section 44. It’s important to note that tax credits differ from tax deductions.
What is the difference between a tax credit and tax deduction?
A tax credit directly reduces the amount of tax you owe, while a tax deduction lowers your taxable income. Tax credits provide a dollar-for-dollar reduction in taxes, while deductions reduce the income subject to taxation. Tax credits generally offer a greater reduction in taxes compared to deductions.
Benefit 1: Tax Credit for ADA Compliance
For instance, you can claim a maximum credit of 50% up to $10,250 for expenditures over $250, resulting in a maximum credit of $5,000.
Here are a couple of examples to illustrate how the Disabled Access Credit works:
Example 1: Let’s say your company spends $5,000 on an accessibility audit or improving your website’s accessibility. Since only expenditures over $250 qualify, subtract $250 from $5,000 to get $4,750. You can claim 50% of that amount as a tax credit, which means you can subtract $2,375 from the amount owed on your next tax return.
Example 2: Now, if your company spends $12,000 on an accessibility audit or enhancing your website’s accessibility, you exceed the $10,250 limit. However, you can still claim $10,000. With a 50% tax credit, you can receive $5,000 as a credit towards your taxes.
Benefit 2: ADA Grants Available
Public entities, local governments, and individuals can take advantage of five grants offered under the Americans with Disabilities Act (ADA). These grants aim to secure funding for improving access to public facilities. Apart from enhancing accessibility, these grants provide additional benefits that complement Social Security Disability (SSD) or Supplemental Security Income (SSI) income.
Benefit 3: Combined ADA Tax Incentives
Small businesses can be eligible for the ADA tax credit and ADA tax deduction—when ADA compliance costs are over $10,250.
Benefit 4: Annual Incentives
You can take advantage of annual incentives by utilizing both the tax deduction and tax credit on a yearly basis. These incentives offer ongoing benefits, allowing you to reduce your tax liability consistently. By leveraging both the tax deduction and tax credit each year, you can maximize your potential savings and optimize your overall tax strategy.
Benefit 5: Compliance and Legal Protection
The legal framework of the Americans with Disabilities Act (ADA) provides essential protection for ensuring accessibility. The ADA requires businesses and public entities to make reasonable accommodations and provide equal access to individuals with disabilities. By complying with ADA guidelines, businesses not only ensure inclusivity but also mitigate the risk of legal issues or discrimination claims. ADA compliance serves as a safeguard, offering legal protection and promoting a more inclusive society.
Embracing Accessibility
In conclusion, embracing accessibility is not only a moral imperative but also brings about tangible benefits for businesses and individuals. The Americans with Disabilities Act (ADA) provides legal protection, ensuring equal access and fostering inclusivity. Through tax incentives and grants, businesses are encouraged to invest in both physical and digital accessibility, creating a more accessible society. By complying with ADA guidelines, businesses can not only enhance their reputation but also mitigate legal risks. It is crucial to recognize the importance of accessibility and continue working towards a future where everyone can fully participate, regardless of their abilities.
*As these are current findings and are subject to change, please consult a tax professional and the IRS for up-to-date information.
