Tax Incentives Packet on the Americans with Disabilities Act


U.S. Department of Justice
Civil Rights Division
Disability Rights Section

Dear Sir or Madam:

I am pleased to send you this Tax Incentives Packet on the Americans with Disabilities Act (ADA). The ADA is opening the doors for people with disabilities across America. Complying with the ADA can bring new customers to your business or help you attract or retain a skilled employee. A tax credit and a deduction are available to help offset some of the costs of improving accessibility.

This package contains information about the tax credit and deduction, the IRS form and instructions for claiming the disabled access credit, a list of free ADA materials, and a list of telephone numbers and Internet sites to help you comply with the ADA.

Our toll-free ADA Information Line is available 24 hours a day to order publications by mail or through our fax delivery service. ADA Specialists are available to answer questions during business hours. The number is 800-514-0301 (voice) or 800-514-0383 (TDD). Our ADA Home Page on the World Wide Web also provides information and publications at any time, day or night. The address is http://www.usdoj.gov/crt/ada/adahom1.htm on the Internet.

I hope you find this package useful, and I encourage you to let others know about it.

Sincerely,

John L. Wodatch
Chief
Disability Rights Section

Tax Incentives for Improving Accessibility

Two tax incentives are available to businesses to help cover the cost of making access improvements. The first is a tax credit that can be used for architectural adaptations, equipment acquisitions, and services such as sign language interpreters. The second is a tax deduction that can be used for architectural or transportation adaptations.

(NOTE: A tax credit is subtracted from your tax liability after you calculate your taxes, while a tax deduction is subtracted from your total income before taxes, to establish your taxable income.)

Tax Credit

The taxcredit, established under Section 44 of the Internal Revenue Code, was created in 1990 specifically to help small businesses cover ADA-related eligible access expenditures. A business that for the previous tax year had either revenues of $1,000,000 or less or 30 or fewer full-time workers may take advantage of this credit. The credit can be used to cover a variety of expenditures, including:

  • provision of readers for customers or employees with visual disabilities
  • provision of sign language interpreters
  • purchase of adaptive equipment
  • production of accessible formats of printed materials (i.e., Braille, large print, audio tape, computer diskette)
  • removal of architectural barriers in facilities or vehicles (alterations must comply with applicable accessibility standards)
  • fees for consulting services (under certain circumstances)

Note that the credit cannot be used for the costs of new construction. It can be used only for adaptations to existing facilities that are required to comply with the ADA.

The amount of the tax credit is equal to 50% of the eligible access expenditures in a year, up to a maximum expenditure of $10,250. There is no credit for the first $250 of expenditures. The maximum tax credit, therefore, is $5,000.

Tax Deduction

The tax deduction, established under Section 190 of the Internal Revenue Code, is now a maximum of $15,000 per year a reduction from the $35,000 that was available through December 31, 1990. A business (including active ownership of an apartment building) of any size may use this deduction for the removal of architectural or transportation barriers. The renovations under Section 190 must comply with applicable accessibility standards.

Small businesses can use these incentives in combination if the expenditures incurred qualify under both Section 44 and Section 190. For example, a small business that spends $20,000 for access adaptations may take a tax credit of $5000 (based on $10,250 of expenditures), and a deduction of $15,000. The deduction is equal to the difference between the total expenditures and the amount of the credit claimed.

Example: A small business' use of both tax credit and tax deduction
$20,000 cost of access improvements (rest room, ramp, 3 doors widened)
- $5,000 maximum credit
$15,000 remaining for deduction

Annual Incentives

The tax credit and deduction can be used annually. You may not carry over expenses from one year to the next and claim a credit or deduction for the portion that exceeded the expenditure limit the previous year. However, if the amount of credit you are entitled to exceeds the amount of taxes you owe, you may carry forward the unused portion of the credit to the following year.

For further details and information, review these incentives with an accountant or contact your local IRS office or the national address below.

For More Information...

Request IRS Publications 535 and 334 for further information on tax incentives, or Form 8826 to claim your tax credit.

IRS Publications and Forms
(800) 829-3676 Voice
(800) 829-4059 TDD

IRS Questions
(800) 829-1040 Voice
(800) 829-4059 TDD

Legal Questions
Internal Revenue Service
Office of the Chief Counsel
1111 Constitution Avenue, NW, Room 5112
Washington, D.C. 20224
(202) 622-3110 Voice/Relay

ADA INFORMATION SERVICES

Department of Justice offers technical assistance on the ADA Standards for Accessible Design and other ADA provisions applying to businesses, non-profit service agencies, and state and local government programs.

ADA Information Line for documents, questions, referrals and fax delivery
800-514-0301 (voice)
800-514-0383 (TDD)

ADA Home Page
http://www.usdoj.gov/crt/ada/adahom1.htm

Equal Employment Opportunity Commission offers technical assistance on provisions applying to employment.

Employment questions
800-669-4000 (voice)
800-669-6820 (TDD)

Employment documents
800-669-3362 (voice)
800-800-3302 (TDD)

Internet address
http://www.eeoc.gov

Department of Transportation offers technical assistance on the provisions applying to public transportation and funds Project ACTION to provide ADA information and publications on making transportation accessible.

ADA Assistance Line for transportation
888-446-4511 (voice)
TDD: use relay service
202-366-2285 (voice)
202-366-0153 (TDD)

Transportation documents and questions
202-366-1656 (voice)
TDD: use relay service

Transportation legal questions
202-366-4011 (voice)
TDD: use relay service
Internet address
http://www.fta.dot.gov

Project ACTION
800-659-6428 (voice)
TDD: use relay service
202-347-3066 (voice)
202-347-7385 (TDD)

Federal Communications Commission offers technical assistance on ADA telephone relay service requirements.

Relay service Directory
202-857-3800 (voice)
202-293-8810 (TDD)

Relay service questions
202-418-0976 (voice)
202-418-0484 (TDD)

Internet address
http://www.fcc.gov/dtf/dfthome.html

Access Board (or Architectural and Transportation Barriers Compliance Board) offers technical assistance on the ADA Accessibility Guidelines.
Documents and questions
800-872-2253 (voice)
800-993-2822 (TDD)

Electronic bulletin board
202-272-5448

Internet address
http://www.access-board.gov

Department of Education funds ten regional centers to provide technical assistance on the ADA.

Disability & Business Technical Assistance Centers
800-949-4232 (voice/TDD)

Internet address
http://www.icdi.wvu.edu/tech/ada.htm

President's Committee on Employment of People with Disabilities answers employment questions and funds the Job Accommodation Network (JAN), which provides advice on accommodating people with disabilities.

Employment questions
202-376-6200 (voice)
202-376-6205 (TDD)

Internet address
http://www.pcepd.gov

Job Accommodation Network
800-526-7234 (voice/TDD)

Internet address
http://askjan.org/

Internal Revenue Service provides information about tax code provisions including tax credits (section 44) and deductions (section 190) that can assist businesses in complying with the ADA.
Tax code information
800-829-1040 (voice)
800-829-4059 (TDD)

To order Publications 535 and 334
800-829-3676 (voice)
800-829-4059 (TDD)

Tax code legal questions
202-622-3110 (voice)
TDD: use relay service

Internet address (to obtain forms, publications and information)
http://www.irs.ustreas.gov