Nayan Padrai is the Founder of EcomBack, a website accessibility services provider.
Many small businesses don’t realize that they may be leaving money on the table when it comes to accessibility compliance. If your business has invested in making your website or physical space more accessible—whether as a proactive effort or in response to an Americans With Disabilities Act (ADA) lawsuit—you could be eligible for a federal tax credit of up to $5,000 per year.
The disabled access credit (DAC) was created to help businesses comply with the ADA and offset the costs of accessibility improvements. My company helps other businesses improve website accessibility, and I’ve found that many businesses view ADA compliance as just another expense. However, the DAC can help turn it into a financial advantage for qualifying businesses.
What is the DAC?
The DAC is an IRS-backed incentive designed to help businesses afford the cost of accessibility modifications. It covers 50% of eligible expenses with a maximum credit of $5,000 per year, according to the IRS. This tax credit is available for businesses that have 30 or fewer full-time employees or $1 million or less in gross revenue.
Many small businesses qualify but don’t take advantage of this credit simply because they don’t know about it or haven’t discussed it with their accountant. If your business meets these criteria and has invested in accessibility improvements, you may be able to reduce your tax bill.
What expenses qualify for the DAC?
Qualifying businesses may be able to apply the DAC to certain physical and digital accessibility improvements, such as:
• Website accessibility fixes, such as upgrades that make a website compliant with Web Content Accessibility Guidelines 2.2 standards
• Communication accessibility, like providing sign language interpreters, braille materials or assistive listening devices
• Physical accommodations, such as installing wheelchair ramps, automatic doors, wider entryways, accessible restrooms or tactile signage
It’s best to consult with a tax professional to see if expenses your business has incurred could qualify.
If you choose to apply for the DAC, ensure you keep records of all accessibility-related expenses. Save invoices and documentation to support your claim. Then, complete and file IRS Form 8826.
Why is accessibility important?
With website accessibility lawsuits increasing, more businesses are realizing that investing in compliance is no longer optional. The DAC can help offset these costs while you’re ensuring your business is legally protected.
I have reviewed hundreds of lawsuits and motions and observed that the common allegations usually include missing alt text for images, forms that aren’t user-friendly, inadequate color contrast and videos lacking captions. My company’s 2023 ADA Website Accessibility Lawsuit Report highlighted a number of sectors that are vulnerable, including lifestyle and fashion, food brands, restaurants, retail, hospitality, medical, travel and more.
If you are using platforms like Shopify, WordPress, Wix, Square or similar to build your website, it is imperative to remember that the burden of compliance lies with you as the business owner. This trend underscores the importance for businesses to proactively ensure their websites are accessible, especially since the cost of doing so is a fraction of the cost of litigation and settlement.
The Takeaway
For businesses investing in accessibility compliance—whether to prevent lawsuits or meet regulatory requirements—the DAC is a powerful tool that may be able to help you offset costs. Beyond the financial incentive, prioritizing accessibility could help expand your customer base by making your business inclusive to individuals with disabilities, reduce legal risk and strengthen brand reputation by demonstrating a commitment to accessibility and inclusion.
Remember to work with your accountant or a tax professional who can help you navigate the DAC and see whether your business and any accessibility-related expenses could qualify.
The information provided here is not investment, tax or financial advice. You should consult with a licensed professional for advice concerning your specific situation.
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