Website accessibility tax credit and the deduction that does not stack
By David LoPresti December 21, 2021 Your accessibility quote says $9,000. A colleague tells you the government pays half, and someone else tells you there is a $15,000 deduction on top of that. The first claim is roughly right and the second one is wrong, and the difference between them is the difference between a return that survives a question and one that does not.
What follows is the statute rather than the summary: which businesses qualify, what the arithmetic actually does to an invoice, why website work can count as an expenditure to comply with the Americans with Disabilities Act, and why the deduction that circulates alongside it is written for ramps and toilet stalls.
This page explains what the law says. It is not tax advice, and whether your spend qualifies is your tax preparer’s call rather than your accessibility vendor’s.
Two invoices, one project, one of them halved
Two businesses spend the same $9,000 on the same accessibility work in the same year.
The first files a scope of work that says “website redesign and updates,” pays from the marketing budget, and keeps the invoice. The second commissions a test against WCAG 2.2 Level AA, receives a report listing each failure against a numbered success criterion, pays for remediation of those failures, and keeps the report, the remediation log and the retest record.
Both spent $9,000. Only one of them has a file that shows the purpose of the expenditure, which is the thing 26 U.S.C. § 44 actually conditions the credit on. The second business is looking at a $4,375 credit against tax owed. The first is looking at a conversation with its preparer that starts with “what exactly did you buy.”
The gap is not in what the money bought. It is in what the paperwork says the money was for.
The credit is 50 percent of a band, not of your invoice
The mechanics are one sentence in the statute, and almost everyone reads it as a percentage of the whole invoice. It is not. The credit is 50 percent of the part of your spend that falls inside a band.
the amount of the disabled access credit determined under this section for any taxable year shall be an amount equal to 50 percent of so much of the eligible access expenditures for the taxable year as exceed $250 but do not exceed $10,250.
Two consequences follow. The first $250 never counts, in any year, at any spend level. And nothing above $10,250 counts either, which puts a hard ceiling of $5,000 on the credit in any one tax year.
| Qualifying spend in the year | Amount inside the band | Credit |
|---|---|---|
| $250 | $0 | $0 |
| $1,000 | $750 | $375 |
| $4,000 | $3,750 | $1,875 |
| $6,000 | $5,750 | $2,875 |
| $9,000 | $8,750 | $4,375 |
| $10,250 | $10,000 | $5,000 |
| $25,000 | $10,000 | $5,000 |
The last two rows are the ones worth staring at. A business that spends $10,250 and a business that spends $25,000 receive exactly the same credit. Everything above the ceiling is unsubsidised, which is a fact about timing rather than about the work, and it is why the section 39 carryforward and the tax-year timing below matter more than it looks.
View the data as a list
- Below $250. No credit. The floor is subtracted before the percentage is applied, so a $200 invoice produces nothing.
- Between $250 and $10,250. Half of everything above the floor. This is the only range where additional spend increases the credit.
- Above $10,250. The credit is frozen at $5,000. The excess is not carried into next year as spend, though the unused credit itself can carry forward.
- Every year separately. The floor and the ceiling reset annually rather than applying to the project.
A word about the word. A deduction reduces the income you are taxed on, so its value depends on your rate. A credit comes off the tax itself. At a 21 percent rate, a dollar of deduction is worth 21 cents and a dollar of credit is worth a dollar, which is why the two incentives in this article are not interchangeable even where both apply.
Either test qualifies you, and most people apply the wrong one
The eligibility definition is short, and the word that carries it is “either.”
the term “eligible small business” means any person if—(1) either—(A) the gross receipts of such person for the preceding taxable year did not exceed $1,000,000, or (B) in the case of a person to which subparagraph (A) does not apply, such person employed not more than 30 full-time employees during the preceding taxable year
A business passes on receipts or it passes on headcount. It does not have to pass on both, and the second test exists precisely for businesses that fail the first. A 45-person services firm turning over $800,000 qualifies on receipts. A 12-person software company turning over $3 million qualifies on headcount.
| Receipts test | Employee test | |
|---|---|---|
| Threshold | $1,000,000 or less | 30 or fewer |
| Measured over | The preceding taxable year | The preceding taxable year |
| Definition | Gross receipts | At least 30 hours a week for 20 or more calendar weeks |
| Applies when | Always tested first | Only where the receipts test is not met |
The employee definition is doing quiet work in that table. The statute counts someone as full-time only if they were “employed at least 30 hours per week for 20 or more calendar weeks” in the year, so part-time staff, seasonal hires and short contracts fall outside the count. A retailer with 40 people on the payroll may have fewer than 30 full-time employees by that measure.
Two details people miss. The test looks at the preceding taxable year, not the year of the spend, so a business that grew past the thresholds this year may still qualify on last year’s numbers. And the credit is not automatic: it applies where the taxpayer “elects the application of this section for the taxable year”, which means it is claimed year by year rather than switched on once and forgotten.
View the data as a list
- A business that grew past the thresholds this year. The tests read the preceding taxable year, so last year’s numbers govern this year’s claim.
- A business in its first year. There is no preceding taxable year to measure, which is a question for a preparer rather than something the statute settles on its face.
- Part-time and seasonal staff. Anyone under 30 hours a week, or under 20 calendar weeks, falls outside the full-time count.
- Receipts above $1,000,000 with a small team. The headcount test is the route, and it is available precisely because the receipts test failed.
- A group of related entities. Which entity holds the receipts and the employees decides which one can elect, and restructuring after the spend does not move the expenditure.
- An entity that is not taxed on income. A credit against tax owed does nothing where no income tax is owed, which is why this incentive does not reach most public bodies or exempt organisations.
Why a website invoice can be an ADA expenditure at all
This is the part every article on the subject asserts and none of them shows. The chain has three links and all three are checkable.
The first link is the purpose test. The credit covers amounts paid “for the purpose of enabling such eligible small business to comply with applicable requirements under the Americans With Disabilities Act of 1990.” The question the statute asks is not whether your website improved. It is whether the money was aimed at an ADA obligation.
The second link is whether that obligation reaches a website at all. The Justice Department’s guidance on web accessibility says the ADA’s requirements apply to the goods, services and activities offered by public accommodations, “including those offered on the web.” If your business is a public accommodation, its website sits inside the obligation, which makes spend aimed at fixing the website spend aimed at compliance.
The third link is the category. The statute lists what an eligible access expenditure is for, and the first item is the one that matters:
for the purpose of removing architectural, communication, physical, or transportation barriers which prevent a business from being accessible to, or usable by, individuals with disabilities
Communication sits in that list beside architectural and physical, with no qualifier limiting it to structural work. A checkout a screen reader cannot complete is a communication barrier on a plain reading of that clause, and the clause is the operative text rather than a gloss on it.
View the data as a table
| Statutory category | What it names | Typical digital equivalent |
|---|---|---|
| (A) | Removing architectural, communication, physical, or transportation barriers | Remediating markup, contrast, focus order, form labelling |
| (B) | Qualified interpreters or other methods for aurally delivered materials | Captions and transcripts for video and audio |
| (C) | Qualified readers, taped texts, methods for visually delivered materials | Alternative text, accessible documents, described media |
| (D) | Acquiring or modifying equipment or devices | Assistive technology used to test or to deliver a service |
| (E) | Other similar services, modifications, materials, or equipment | Testing and remediation services against the standard |
Nobody has published a technical standard for a private business website
Here is the complication the niche never raises, and it cuts both ways.
The Justice Department has issued a web accessibility regulation for state and local government, and none for private businesses. When it withdrew the Title III web rulemaking, the notice said only that the Department was “evaluating whether promulgating regulations about the accessibility of Web information and services” was necessary and appropriate. That evaluation has not produced a Title III rule.
So a private business asking “what am I complying with” has an obligation without a published yardstick. WCAG is the benchmark in practice, in settlements and in consent decrees and in every serious audit, but for a Title III business it is a convention rather than a citation.
The consequence for a tax file is specific rather than fatal. Where a regulation exists, purpose is easy to evidence: you name the rule and the version. Where it does not, purpose has to be evidenced by the work itself, which means a named standard, a dated test against it, a list of failures and a record of what was fixed. This is exactly the documentation an accessibility audit against the standard produces anyway, and it is why the sequence in which a project is run affects whether the claim is defensible.
Government contractors sit differently. An entity working to Section 508 or to the Title II rule has a cited standard and a cited version, and its purpose file writes itself.
A government contractor has a cited standard, and that changes the file
Two businesses can buy identical accessibility work and end up with purpose files of very different strength, because the obligation behind the spend is documented in one case and inferred in the other.
A vendor selling to a state or local government works against a published rule. The Title II web rule adopts WCAG 2.1, Level AA as the technical standard, and it sets dates: April 26, 2027 for entities serving a population of 50,000 or more, and April 26, 2028 for smaller entities and special district governments. A vendor selling to a federal agency works against the Revised 508 Standards, which incorporate WCAG 2.0 Level A and AA. In both cases the purpose test is answered by naming the rule, the version and the deadline, and the contract usually names them for you.
A restaurant, a clinic or a retailer under Title III has the obligation without the citation. The spend is still aimed at compliance, and the credit still reaches it on the statutory language, but the file has to carry the weight that a regulation would otherwise carry. That means a named standard chosen deliberately, a dated test, and a record of what changed.
The practical instruction differs accordingly. If a contract, a solicitation or a grant condition names an accessibility standard, quote it in the scope of work and keep the clause with the invoice. If nothing names one, the scope of work is where the standard gets named, and the vendor who writes “WCAG 2.2 Level AA” into it is doing more for the tax file than the vendor who writes “accessibility improvements.”
The $15,000 deduction is written for ramps and toilets
This is the mistake in circulation, and it is worth being blunt because it is repeated by nearly every page ranking for this topic.
There is a second incentive, 26 U.S.C. § 190, and its cap is real: “the deduction allowed by subsection (a) for any taxable year shall not exceed $15,000.” Articles about web accessibility invite readers to add that to the credit and treat $20,000 as the combined ceiling for a website project.
Read what it covers. The deduction is for expenditure “for the purpose of making any facility or public transportation vehicle owned or leased by the taxpayer” more accessible. A website is not a facility and it is not a public transportation vehicle.
If the statutory wording leaves any doubt, the regulation removes it. 26 CFR § 1.190-2 sets out what qualifies, and its detailed standards cover grading and ground access, walking surfaces, ramps, parking, entrances and doorways, stairs, elevators, toilet rooms, water fountains, public telephones, controls and signage, and modifications to buses and rail vehicles. Its requirements were adapted from a 1971 American National Standards Institute specification for making buildings accessible. There is no reading of that document in which a checkout page appears.
| Section 44 credit | Section 190 deduction | |
|---|---|---|
| What it reaches | Expenditure to comply with the ADA, including removing communication barriers | A facility or public transportation vehicle owned or leased by the taxpayer |
| Annual limit | $5,000 credit, from $10,000 of qualifying spend | $15,000 deduction |
| Value of a qualifying dollar | 50 cents off tax owed | Your marginal rate off taxable income |
| Who can use it | Eligible small businesses only | Any business |
| Applies to a website | Yes, on the statutory language | No |
The two do combine, in one situation, and the guidance is careful about the condition. The IRS says a business may use the credit and the deduction together in the same tax year “if the expenses meet the requirements of both sections.” A restaurant that widens its entrance and remediates its ordering site has spend in both categories: the entrance goes to the deduction, the site goes to the credit. What never happens is the same dollar appearing in both places, because where the credit applies, “no deduction or credit shall be allowed for such amount under any other provision” of the chapter.
What reasonable and necessary removes from a claim
The statute contains a sentence that no article on this topic quotes, and it is the one a reviewer would reach for.
Amounts paid or incurred for the purposes described in paragraph (2) shall include only expenditures which are reasonable and shall not include expenditures which are unnecessary to accomplish such purposes.
Two words there do real work. Reasonable prices the work against what the purpose required. Unnecessary excludes the parts of an invoice that were not aimed at removing a barrier at all.
The practical effect is about scoping rather than about spending less. A project described as a rebuild, priced as a rebuild, and delivered as a rebuild has accessibility somewhere inside it and no way to say how much. A project scoped against a list of failures has a number attached to each fix. Where a redesign genuinely happened and accessibility work happened alongside it, the defensible position is a separated invoice rather than a claim on the whole figure.
Recurring software raises the same question from a different direction. A subscription that layers a widget over a site without changing what a screen reader encounters is a harder argument than remediation work on an existing site, because the purpose test asks what the money removed rather than what it added.
View the data as a table
| Invoice description | What a reviewer can tell | Strength of the purpose file |
|---|---|---|
| ”Website updates” | Nothing about purpose | Weak |
| ”Website redesign, includes accessibility” | Purpose is mixed and unquantified | Weak |
| ”WCAG 2.2 AA audit, 14 templates” | Purpose is explicit, scope is named | Strong |
| ”Remediation of 63 findings from the 14 March report” | Purpose, scope and lineage | Strong |
| ”Accessibility widget, annual licence” | Purpose asserted, barrier removal unclear | Contested |
Non-refundable, and what happens to the rest
A detail that decides real cases. The IRS describes the credit as “a non-refundable credit for small businesses,” which means it reduces tax you owe and stops at zero. If your liability for the year is $900, a $4,375 credit does not send you a cheque for $3,475.
The remainder is not lost. The disabled access credit is a component of the general business credit, and 26 U.S.C. § 39 turns an unused business credit into a “carryforward to each of the 20 taxable years following the unused credit year.” A business having a thin year has two decades to use what it could not use now, which changes the calculation for a company that is investing while its profit is small.
The credit also repeats. The IRS states plainly that a business “can claim the credit each year they incur access expenditures,” and each year is assessed on its own floor and its own ceiling.
That combination produces a planning point rather than a loophole. A $20,000 remediation programme delivered and invoiced inside one tax year reaches the $5,000 ceiling and leaves roughly half the spend unsubsidised. The same programme split across two tax years, with genuine work and genuine invoices in each, meets two ceilings. Nothing about that requires inventing dates, and everything about it requires deciding before the invoices are raised rather than in April.
The limitation that decides how much you can actually use
Non-refundability is the limit people hear about. There is a second one underneath it, and for a profitable business it bites first.
The general business credit is capped each year by a formula in 26 U.S.C. § 38:
The credit allowed under subsection (a) for any taxable year shall not exceed the excess (if any) of the taxpayer’s net income tax over the greater of—(A) the tentative minimum tax for the taxable year, or (B) 25 percent of so much of the taxpayer’s net regular tax liability as exceeds $25,000.
Unpack the second branch, because it is the one most small businesses meet. Below $25,000 of net regular tax, nothing is subtracted and the whole liability is available to absorb credits. Above it, a quarter of the excess is held back and cannot be reached by the general business credit in that year.
A worked case. A business with $60,000 of net regular tax and no minimum tax exposure holds back 25 percent of the $35,000 above the threshold, which is $8,750. It can use up to $51,250 of general business credit this year. A $5,000 disabled access credit sits comfortably inside that, which is the usual outcome and the reason this limitation rarely surfaces for a single small claim.
It surfaces when the credit is not alone. The disabled access credit shares its ceiling with every other component of the general business credit: work opportunity, research, small employer pension start-up, employer-provided childcare and the rest. A business already carrying a research credit can find the accessibility credit fully computed, fully valid, and partly unusable this year, with the balance moving into the carryforward.
Two consequences for planning. The order in which credits are absorbed is set by statute rather than by preference, so a business cannot choose to spend the accessibility credit first. And a company with other credits in play should size its accessibility spend against the whole general business credit position rather than against the $5,000 ceiling in isolation, which is a conversation for a preparer who can see the full return.
The credit does not stop at the company
Small businesses that qualify for this credit are frequently not taxed as corporations, and the mechanics change accordingly.
The disabled access credit is claimed on Form 8826, which the IRS describes in one line: “Eligible small businesses use Form 8826 to claim the disabled access credit.” That form does not stand alone. It feeds the general business credit, and the Form 3800 instructions are direct about the requirement: “You must file Form 3800 and the credit source form(s) to claim” a general business credit.
For a partnership or an S corporation, the credit is computed at the entity and passed through to partners or shareholders, who report their share on their own return. That has two consequences worth raising with a preparer before the work is scoped. The limitation that decides how much credit is usable is applied at the owner’s level rather than the company’s, so two shareholders in the same company can have different outcomes in the same year. And an owner with several business interests may find the credit interacting with other components of the general business credit.
What the file has to show
The purpose test is the whole question, and it is answered with documents rather than with intent.
A report that maps findings to numbered success criteria does two jobs at once. It tells developers what to fix, and it puts on paper that the money was spent removing identified barriers rather than refreshing a brand. A retest record afterwards closes the loop by showing that the findings named in the report were the findings resolved.
Set the two files beside each other. One says a business redesigned its website in 2026 and would like a credit. The other says a business was tested against WCAG 2.2 Level AA on 14 March, received 63 failures mapped to 19 success criteria, paid to remediate them, and was retested on 2 June with 61 resolved and 2 accepted as risks. The same money is in both files. Only the second describes a purpose.
The boundary is worth stating plainly to anyone selling you accessibility work. A vendor can tell you what the work was and produce the documentation. Whether it qualifies, how it interacts with the rest of your return, and how much of it you can actually use this year are your preparer’s questions. A vendor promising you a $5,000 credit is describing a statute they do not administer.
What nobody has published
Research for this article did not turn up several things a reader might reasonably expect to exist.
There is no IRS ruling, notice or publication that names websites as eligible access expenditures. The argument for web work rests on the statutory language, on the DOJ position that the ADA reaches what businesses offer online, and on the absence of any authority to the contrary. That is a strong file rather than a settled question, and anyone telling you the IRS has blessed website spend is describing a document that has not been published.
No published Tax Court decision applying section 44 to website remediation turned up either. The reported disputes about this credit concern equipment leases and physical modification, which is what you would expect from a 1990 statute, and none of them speaks to digital work.
Several states run their own disabled access credits alongside the federal one, and Missouri and California both publish programmes. Their terms, thresholds and carryforward rules differ from the federal section and from each other, and the state pages did not return to automated retrieval for this article, so no state figures are quoted here. Ask your preparer whether your state runs one before assuming the federal credit is the whole of it.
Nothing published quantifies how often the credit is claimed for accessibility work, digital or otherwise. The IRS publishes statistics on general business credit components in aggregate rather than by purpose, so there is no way to say from public data whether this credit is under-claimed by small businesses or simply small.
And the technical standard question stays open. The Title III rulemaking has not returned, so a private business still has an obligation without a cited version to comply with, and that is a fact about the law rather than an omission from this page.
Questions buyers ask before signing an accessibility invoice
Does website accessibility work definitely qualify for the credit?
The statutory language supports it and no published authority contradicts it. Eligible access expenditures include removing “communication” barriers, with no structural qualifier attached, and the Justice Department treats the ADA as reaching what a business offers on the web. What the statute requires is that the purpose of the spend was ADA compliance, which is a question about your documentation rather than about the technology. The IRS has not published guidance naming websites, so your preparer makes the call on your return.
Can I claim it if my business has more than 30 employees?
Probably, if your receipts are small enough. The two tests are alternatives. A business qualifies if gross receipts for the preceding taxable year did not exceed $1,000,000, and only where that fails does the headcount test apply. A business with 45 employees and $800,000 in receipts qualifies on receipts. The reverse also holds: a business with $3 million in receipts and 12 full-time employees qualifies on headcount.
Can I claim the credit two years running?
Yes. The IRS states that a business can claim the credit each year it incurs access expenditures, and each year is measured on its own. The $250 floor and the $10,250 ceiling both reset annually. Continuing work such as monitoring, remediation of newly published content, and retesting after releases can qualify in each year it happens, on the same terms as the first year.
Can I stack the $15,000 deduction on the same website project?
No. Section 190 reaches a facility or a public transportation vehicle, and its regulation details ramps, doorways, stairs, elevators, toilet rooms and vehicle modifications adapted from a 1971 building standard. A business with physical premises can use both incentives in the same year for different spend, the deduction for the building and the credit for the site. The same dollar never appears in both places.
Does an accessibility overlay or widget subscription qualify?
Treat it as contested and take the contract to your preparer. The purpose test and the reasonableness limit both apply, and the statute excludes expenditures that are unnecessary to accomplish the purpose. A product that layers controls over a site without changing what assistive technology encounters is a weaker claim than code-level remediation, and a recurring licence raises a separate question about which year the expenditure belongs to.
Do I need a demand letter before the spend counts?
No. Nothing in section 44 conditions the credit on a complaint, a lawsuit or a demand letter. The test is the purpose of the expenditure, which is enabling compliance with ADA requirements, and voluntary work meets that test on exactly the same terms as work commissioned after a lawyer writes to you. Waiting for the letter produces the same credit, a worse negotiating position and a compressed timeline.
What happens if the credit is larger than the tax I owe?
It reduces your liability to zero and the balance carries forward. The credit is non-refundable, so it will not generate a refund on its own, but an unused general business credit carries forward to each of the 20 taxable years following the year it arose. For a business investing during a low-profit year, that means the credit is deferred rather than forfeited.
Which records should I keep?
Keep the invoices, and keep whatever establishes purpose: the audit report with its date and named standard, the scope of work that refers to the findings, the remediation log, and the retest record. Where the work was part of a larger project, keep an invoice that separates the accessibility scope from the rest. Purpose is the condition in the statute, and it is the thing a thin file cannot demonstrate after the fact.
Your next step
Take the quote on your desk and do three things in order.
First, check the preceding year rather than this one. Pull last year’s gross receipts, and if they exceed $1,000,000, count full-time employees using the statutory definition of 30 hours a week for 20 or more calendar weeks. That test decides whether the rest of this page applies to you at all.
Second, look at where the ceiling falls against your quote. If the project is above $10,250 and the work can honestly be delivered in two phases across two tax years, that conversation belongs with your preparer now rather than after the invoices are dated.
Third, fix the scope before the work starts. Ask your vendor for a scope written against a named standard and a dated report of findings, and ask for the retest record as a deliverable rather than a courtesy. That file is what makes the purpose test answerable, and it costs nothing extra to require it at the start.
Where the accessibility work itself is the gap, ADACP’s accessibility remediation and ADA website compliance engagements produce the report, the remediation record and the retest that a purpose file is built from.