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ADA Tax Incentives for Businesses

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Two Federal Tax Incentives

The federal government offers two tax incentives to help businesses pay for ADA accessibility improvements. Many business owners don't know these exist — but they can significantly reduce the cost of making your business accessible.

The two programs are:

  • Disabled Access Credit (Section 44): A tax credit of up to $5,000 per year for small businesses
  • Barrier Removal Deduction (Section 190): A tax deduction of up to $15,000 per year for any business

You can use both incentives in the same tax year, which means a qualifying small business could receive up to $20,000 in combined tax benefits annually for accessibility improvements.

Section 44: Disabled Access Credit

The Disabled Access Credit is a tax credit — meaning it directly reduces the taxes you owe, dollar for dollar. It's worth more than a deduction of the same amount.

Maximum credit$5,000 per year
How it works50% of eligible costs between $250 and $10,250
Who qualifiesBusinesses with ≤30 full-time employees OR ≤$1 million gross receipts
IRS formForm 8826 — Disabled Access Credit
Can carry forwardYes, unused credit can be carried forward

Example: A small restaurant spends $6,250 on installing a ramp and accessible restroom fixtures. The eligible amount is $6,250 − $250 = $6,000. The credit is 50% of $6,000 = $3,000 off their tax bill.

Official Standard

Internal Revenue Code §44

"An eligible small business for any taxable year may elect to claim an amount equal to 50 percent of so much of the eligible access expenditures for the taxable year as exceed $250 but do not exceed $10,250."

Eligible Small Business Defined

"The term 'eligible small business' means any person if either (A) the gross receipts of such person for the preceding taxable year did not exceed $1,000,000, or (B) such person employed not more than 30 full-time employees during the preceding taxable year."

Section 190: Barrier Removal Deduction

The Barrier Removal Deduction is a tax deduction — it reduces your taxable income (not your tax bill directly). Unlike Section 44, there is no size restriction — any business can claim it.

Maximum deduction$15,000 per year
Who qualifiesAny business, any size
What it coversRemoving architectural, transportation, or communication barriers
Claimed onBusiness tax return as a current expense

Example: A mid-size retail chain spends $12,000 widening aisles and installing automatic doors at one location. They can deduct the full $12,000 as a current expense rather than capitalizing it over many years.

Official Standard

Internal Revenue Code §190

"A taxpayer may elect to treat qualified architectural and transportation barrier removal expenses which are paid or incurred by him during the taxable year as expenses which are not chargeable to capital account. The expenditures so treated shall be allowed as a deduction."

The maximum deduction is $15,000 per taxable year for qualified expenses related to removing architectural barriers, transportation barriers, or communication barriers in a facility or public transportation vehicle.

Using Both Incentives Together

A qualifying small business can use both Section 44 and Section 190 in the same tax year. When combined:

  • Apply the Section 44 credit first to the first $10,250 of eligible expenses
  • Then apply the Section 190 deduction to any remaining qualifying expenses, up to $15,000

Example: A small dental office spends $20,000 on accessibility improvements. They claim the Section 44 credit on the first $10,250 (getting a $5,000 credit), then deduct the remaining $9,750 under Section 190. Total tax benefit: the $5,000 credit plus a $9,750 deduction.

What Expenses Qualify?

Both incentives cover a wide range of accessibility expenses:

Barrier removal

Installing ramps, widening doorways, adding grab bars, lowering counters, repaving for accessible parking

Signage

Braille signage, raised-character room signs, accessible parking signs, directional signage

Equipment

TTY/TDD devices, assistive listening systems, video relay equipment, accessible point-of-sale systems

Interpreters and readers

Sign language interpreters, qualified readers for people with vision disabilities

Materials in alternative formats

Large print, Braille, audio versions of menus, documents, or materials

Website accessibility

Remediation to meet WCAG guidelines, screen reader compatibility, captioning

How to Claim on Your Tax Return

Here's how to take advantage of each incentive:

  1. Section 44 Credit: File IRS Form 8826 (Disabled Access Credit) with your annual tax return. The credit flows to your Form 3800 (General Business Credit).
  2. Section 190 Deduction: Claim the deduction directly on your business tax return as a current-year expense. No special form is required — but keep detailed records and receipts.
  3. Keep records: Document all expenditures with invoices, photos of work completed, and a description of how each expense relates to ADA accessibility.

Important Note

This guide provides general information about ADA-related tax incentives. Tax law is complex and individual circumstances vary. Consult a qualified tax professional or CPA before claiming these credits and deductions. For legal questions about your ADA obligations, connect with an experienced ADA attorney.

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