Hidden Tax Credit - ADA Tax Credit
To assist businesses with complying with the Americans with Disabilities Act (ADA), Section 44 of the IRS Code allows a tax credit for small businesses and Section 190 of the IRS Code allows a tax deduction for all businesses in making access improvements.
The tax CREDIT can be used to offset the cost of a variety of expenditures related to adaptations/modifications to existing facilities that are required to comply with the ADA. The credit CANNOT be used for the costs of new construction. The tax DEDUCTION can be used for architectural or transportation adaptations and is available to all businesses.
The tax CREDIT can be used to offset the cost of a variety of expenditures related to adaptations/modifications to existing facilities that are required to comply with the ADA. The credit CANNOT be used for the costs of new construction. The tax DEDUCTION can be used for architectural or transportation adaptations and is available to all businesses.
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2ADA Tax Credit Explained
- Internal Revenue Code (IRC) 44 allows a tax credit up to $5,000 per year
- Dollar for dollar credit
- BONUS: Can be used in conjunction with the ADA tax deduction
- Credit on the first $10,250 access expenditures per year
- Applies to small businesses
- $1M gross revenue or less in the prior year
- Less than 30 full-time employees
- Internal Revenue Code (IRC) 44 allows a tax credit up to $5,000 per year
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3What Qualifies for the Credit?
- IRC 44 allows for up to $5,000 credit per year
- Access improvements include, but not limited to:
- Website expenditures for ADA compliance
- Sign language, braille, large print, audio tapes, etc.
- Adaptive equipment for customers or staff
- Elimination of physical barriers to access to in facilities such as adding handrails, adjusting door width for wheelchair accessibility, addition of ramps, etc.
- Fees for ADA consulting to comply with ADA
- Applies only to improvements made to comply with ADA; new construction is excluded
When in doubt, ask our Team about the expenditures and/or track in separate accounts. Do not bury them under "fixed assets" or some other category. Also, many contractors or website specialists can break out these ADA costs separately if you ask them to.EXAMPLE: XZY Company spends $18,000 to widen doors and improve their website for ADA compliance. They choose to finance the expenditures with their LOC.
Total Project Cost: $18,000
Tax Credit: ($5,000)
Balance: $13,000 Available for IRC 190 special deduction- Total Tax savings = $9,550
- Net Cost of Projects - $8,450
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