ADA Tax Credits for Web Accessibility: What to Know

Written by CJ | Apr 11, 2024

Compliance with the Americans with Disabilities Act (ADA) isn’t optional — but if you’re having trouble fitting digital accessibility in your budget, you may be eligible for some help.

The Internal Revenue Service (IRS) offers the Disabled Access Credit, a non-refundable credit for small businesses that encounter expenses when making accessibility improvements. Below, we’ll explain how the Disabled Access Credit can help businesses save.

What is the Disabled Access Credit?

The Disabled Access Credit is a tax incentive that encourages compliance with Title III of the ADA. Title III applies to places of public accommodation, including brick-and-mortar businesses and websites.

Qualifying businesses may receive a tax credit for up to 50% of expenditures up to $10,000 after the first $250, for a maximum credit of $5,000. A business may claim the credit for each year they incur expenditures related to accessibility.

Here’s how the disabled access credit works in practice:

A qualifying business spends $4,500 to make their website accessible. They can claim a tax credit of half of $4,250, a total credit of $2,125.
A qualifying business spends $11,000 to make their website accessible. $5,000 of the expenditure is eligible for the tax credit.
A qualifying business spends $250 to make their website accessible. Since the first $250 does not count towards expenses, the business does not receive a credit.

Tax credits work differently than tax deductions. Deductions are not taxable, while credits are subtracted from your total tax burden. Essentially, the IRS is subsidizing the improvements you make to your website — which can drastically reduce the cost of a web accessibility initiative.

What businesses are eligible for digital accessibility tax credits?

The federal Disabled Access Credit is only available for small businesses that have earned $1 million or less for the year and had no more than 30 full-time employees over the course of that year.

If your business doesn’t qualify, speak with your tax professional: State-level programs may be available for businesses that embrace digital accessibility.

What types of accessibility improvements are eligible for Title 26 tax credits?

Access expenses are eligible if they are “reasonable and necessary" to accomplish these purposes:

To remove barriers that prevent a business from being accessible (or usable) to people with disabilities.
To provide qualified interpreters or “other methods" of making audio materials available to the Deaf and people with hearing impairments.
To make visual materials available to people with vision impairments.
To acquire or modify equipment or devices for individuals with disabilities.

An accessible website can certainly help businesses meet these goals. However, you’ll need a strategy that clearly prioritizes accessibility — a general website redesign may not be an eligible expense.

What makes a business compliant with the ADA?

The ADA doesn’t have technical guidelines for websites, mobile apps, or other digital products. But those standards certainly exist: The Web Content Accessibility Guidelines (WCAG) are the international standards for digital accessibility.

WCAG has been cited in numerous ADA lawsuits filed under both Title II (which applies to government agencies) and Title III (which applies to private businesses). Bringing your website into conformance with WCAG can help you improve ADA compliance — and qualify for web accessibility tax credits.

For example, WCAG requires captions and transcripts for video content. That directly addresses two of the measures that qualify businesses for the Disabled Access Credit.

Remember, an accessible website helps your business reach more people

The best practices of accessibility benefit everyone. If you’ve ever read captions on a video without enabling sound, or if you’ve used an app’s “dark mode" to limit eye strain, you’ve benefited from accessibility — and your business has a legal and ethical responsibility to provide an inclusive experience to all users.

The Disabled Access Credit and other tax programs can help you mitigate the cost of accessibility improvements. Ultimately, though, accessibility is an investment, not a cost; every dollar spent on inclusive design will pay dividends via higher customer engagement, improved search engine positioning, and the other business benefits of web accessibility.

Talk to your tax professional to determine whether tax credits can help you reduce the cost of an accessibility initiative. To start building a long-term strategy for ADA compliance, send us a message or get started with a free graded WCAG conformance report.

View full post