ADA Tax Credit & Web Accessibility: Do You Qualify?

Every year, more businesses are realizing the importance of complying with web accessibility requirements and best practices. 

By making your digital platforms accessible to everyone, including those with disabilities, your business becomes more inclusive, which has a direct and positive impact on your bottom line. Not to mention the fact that you can avoid costly lawsuits. 

However, there’s no denying that web accessibility can be a financial investment, especially if you’re starting from scratch. 

Fortunately, the U.S. government has opted to support businesses that have chosen to comply through the implementation of the ADA tax credit. 

What is the ADA Tax Credit?

The tax credit is currently listed under Section 44 of the IRS code and covers 50% of eligible expenditures incurred during the last tax year. No credit is due for the first $250 of expenditures and the maximum expenditure limit is capped at $10,250. 

This means that businesses can receive up to $5,000 in tax credit every year.

It should be noted that tax credit is different from tax deductions. Where tax deductions reduce the amount of tax that is immediately owed on taxable income, tax credit is subtracted from the tax owed at a later stage. 

Why Is ADA Tax Credit Relevant to You?

The Americans with Disabilities Act was first implemented to prevent discrimination based on disability across areas such as employment, transport, and public accommodations. Several years ago, this extended into the digital landscape, ensuring everyone has equal access to digital platforms, apps, and media. 

This means that section 44 ADA tax credit is relevant to any business that chooses to comply with ADA requirements, including investing in and operating accessible websites. 

The tax credit could be relevant to businesses that choose to: 

• Make adjustments to their website page structures, hierarchy, and content with the help of tools and web accessibility solutions
• Pay fees for accessibility consulting services
• Remediate digital files and media to meet ADA requirements
• Invest in additional functionality such as live chat support

Beyond the digital landscape, ADA tax credit may also be relevant to businesses that decide to purchase adaptive equipment, produce accessible formatting on printed materials, or remove architectural barriers.

If your business falls into any of these categories, there’s a chance that you can apply for ADA tax credit on an annual basis.

ADA Tax Credit Eligibility Criteria

Businesses that have a total revenue of $1,000,000 or less in the previous tax year, or 30 or fewer full-time employees are eligible for ADA tax credit. 

The maximum refund of up to $5,000, depending on expenditure, can be used to offset any costs associated with removing physical or digital barriers for employees and/or customers on an annual basis. 

How to Apply for ADA Tax Credit

Once you are sure that your business is eligible for the Section 44 ADA tax credit, you will need to complete Form 8826 to apply. 

This form needs to be attached to your annual tax return and sent together. 

If you need further details on the rules regarding tax credit, this can be found on the IRS government website. Page 2 of Form 8826 also has further instructions that are useful to anyone applying for the first time.  

It’s also recommended that you consult with a tax professional before you send your return files to ensure your submission is clear and correct. In fact, your chosen tax firm or consultant can complete the form for you if you’re feeling unsure about the process.

Final Words

Along with the general benefits of complying with ADA requirements, this new tax credit will go a long way in further encouraging businesses to do their part in building a more inclusive society and future. 

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