Opportunities for tax credits

There are some tax deductions and credits available to employers of people with disabilities.

Read the criteria below and see if any apply to you.

Disabled Access Tax Credit: Eligible small businesses can receive 50% of certain costs related to providing access for employees with disability.

Architectural and Transportation Barrier Removal Credit: Credits are available for making facilities or public transportation vehicles more accessible to, and usable by, people with disabilities

Targeted Jobs Tax Credit: Credits are available for wages of certain first-year employees referred by local VR and other agencies

Work Opportunity Tax Credit (WOTC): Credits are available to encourage employers to hire individuals from certain groups who have faced barriers to employment, including SSI recipients and people with disabilities referred by VR agencies

Eligible small businesses can receive 50% of certain costs that are greater than $250 but do not exceed $10,250 for a taxable year. The business can take this credit each year that it spends money on an eligible cost related to access.

Eligible small business must satisfy either:

  • $1 million or less in gross receipts for the preceding tax year; or

  • 30 or fewer full-time employees during the preceding tax year.

Eligible access expenditures– these are amounts paid or incurred by an eligible small business for the purpose of enabling that business to comply with the ADA. These include amounts paid or incurred to:

Example: Wally’s Warehouse removes a physical barrier in order to meet its reasonable accommodation obligation under the ADA. The barrier removal costs $10,000. The amount by which $10,000 exceeds $250 is $9,750. Fifty percent of $9,750 is $4,875. Wally’s Warehouse may take a tax credit for $4,875 on its next tax return.

Source: EEOC

The IRS allows a deduction of up to$15,000 per year for making a facility or public transportation vehicle more accessible to, and usable by, people with disabilities.

For more details and definitions, visit EEOC and Job Accommodations Network.

Employers can receive a credit of up to 40% of the first $6,000 of first-year wages of a new employee with a disability who is:

  • Referred by a state or local VR agency, a state commission on the Blind, or the U.S. Department of Veterans Affairs, and

  • Certified by a State Employment Service. This credit is for the first year of employment only.

For more information, visit EEOC.

WOTC encourages employers to hire individuals from certain groups who have faced significant barriers to employment. This includes SSI recipients and people with disabilities who have been referred by a VR agency.

Employers can earn a credit of between $1200 and $9600 per employee, depending on the target group of the employee and the number of hours worked.

Click the links below for more information:

More info on target groups: https://www.doleta.gov/business/incentives/opptax/eligible.cfm

Brochure for employers on the WOTC program: https://www.doleta.gov/business/incentives/opptax/PDF/WOTC_Program_Brochure.pdf

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