IRS Tax Code Section 44 – Disabled Access Credit

The Americans with Disabilities Act (ADA) mandates that businesses modify their facilities to include people with disabilities. As a result, the Internal Revenue Code contains several Sections that provide Tax Incentives to comply with the law.

IRS Section 44 of the Internal Revenue Code grants eligible small businesses an annual tax credit of up to $5,000 for expenditures incurred "to comply with applicable requirements under the Americans with Disabilities Act of 1990". The amount that may be taken is 50% of the eligible access expenditures incurred that exceed $250 but do not exceed $10,250 per tax year.

Eligible small businesses should have gross receipts (for the year preceding the taxable year) under $1M or thirty or fewer full-time employees.

Limitations

• Expenditures must be "reasonable" and must meet standard regulations issued by the IRS.
• Expenses for new construction or those that are not necessary to accomplish ADA accessibility are not eligible.
• Expenses incurred in the renovation of a facility or in the normal replacement of a facility or in the normal replacement of depreciable property are not included.

Advantages

• IRS Section 44 allows for a "tax credit" as opposed to a "tax deduction". A "tax credit" reduces taxes owed whereas the "tax deduction" reduces Adjusted Gross Income.
• IRS Section 44 can be used in conjunction with other tax reduction economic stimulus programs such as IRS Section 179 and the Job Creation and Worker Assistance Act of 2002.

*This information provides general guidance. This is not financial tax advice. Consult your tax advisor for individual circumstances.

Click here for the Disabled Access Credit Form