Tax Incentives Can Offset the Cost of ADA Compliance

By Hays, Scott | Workforce, July 1999 | Go to article overview

Tax Incentives Can Offset the Cost of ADA Compliance


Hays, Scott, Workforce


More than 43 million Americans with physical or mental impairments are protected under the Americans with Disabilities Act (ADA). But did you know federal tax incentives help eligible small businesses offset the cost of making accommodations and otherwise complying with the ADA? There are actually more tax breaks and governmental support than most employers realize.

And we're not talking chump change here, either.

Although the ADA guidelines may seem overwhelming, they merely extend rights and responsibilities to people with disabilities. Private companies need only to remove barriers in existing buildings and construct new facilities. This could mean something as simple as adding lights to the standard beepers on forklifts, or building an entrance ramp for wheelchair-bound employees.

Tax credit covers ADA expenses.

Several provisions of the IRS tax code can help ease the bite of complying with the ADA when making your company's facilities accessible, says Heather O'Donnell, a corporate tax attorney for the Chicago-based law firm Holleb & Coff. "The Disabled Tax Credit has been around since 1990, and provides a tax credit for expenditures incurred by businesses to make the workplace more accessible for disabled individuals."

Section 44 of the IRS Code allows a tax credit for small businesses with total revenues of $1 million or less the previous tax year, or 30 or fewer full-time employees. This credit can cover 50 percent of the "eligible access expenditures" in a year up to $10,250 (maximum credit is $5,000). The tax credit can be used for such things as architectural adaptations, equipment acquisitions, services such as sign language interpreters, and for purchasing certain adaptive equipment.

Note: The tax credit cannot be used for the costs of new construction. It can be used only for adaptations to existing facilities to comply with the ADA. The credit is subtracted from your tax liability. For example, if you owe $20,000 in federal income tax and you received the maximum Disabled Tax Credit of $5,000, you'll only owe $15,000, says O'Donnell. …

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