ADA Tax Incentives

Creating accessible medical offices is not only the right thing to do, it’s more affordable than you may think!  Through government tax incentives, the cost of accessible equipment can be cut by close to half.

By investing in access improvements, some UpScale customers may be entitled to substantial savings through federal tax credits and deductions, potentially reducing the cost of purchasing equipment like the UpScale by close to 50%.

Eligible small businesses are faced with an easy decision … purchase a traditional, manual table with few bells and whistles, or purchase a two-in-one, fully-powered height-adjustable exam table with built-in scale … for nearly the same price.  The combination of ADA tax incentives makes purchasing an UpScale the highly appealing option.

Federal ADA Tax Credit for Qualifying Small Businesses

Under the IRS’s Disabled Access Credit, eligible small businesses can take a federal tax credit equal to 50% of the amount they spend on access improvements. There is no credit for the first $250 of expenditures, and the maximum credit a business can elect for any tax year is $5,000.  Eligible businesses are defined as those with 30 or fewer employees or total revenue of $1 million or less.

Example A: An eligible health clinic with 25 employees spends $8,000 in one year on access improvements.  To calculate the credit, first deduct $250.  Then calculate 50% of the remaining $7,750, which is $3,875.   This is the amount that would be available as a potential tax credit.

See Form 8836 at www.irs.gov/pub/irs-pdf/f8826.pdf for additional information about the Disabled Access Credit, established under Section 44 of the Internal Revenue Code.

Federal ADA Tax Deduction

Meanwhile, businesses of any size are entitled to a federal tax deduction under Section 190 of up to $15,000 per year for removing access barriers in their facilities. Alternatively, they may also be eligible for a deduction for the cost of equipment purchases under Section 179.

Small businesses cannot claim a tax credit and deduction for the same dollar spent; however, they can use the incentives in combination, provided that the expenditures incurred qualify under both.

Example B: A small, eligible physician’s practice spends $5,000 in a year on access improvements. To calculate the credit/deduction, first subtract $250. Then calculate 50% of the remaining $4,750, which is $2,375. This is the amount of the tax credit. The business could potentially take the $2,375 as a Federal Tax Credit and claim the remaining $2,625 cost as a Federal Tax Deduction. Assuming a tax rate of 35%, this deduction could bring the net cost of the original $5,000 expense down to $1,706.25.

See Publication 535 (Number 7: Barrier Removal) at www.irs.gov/publications/p535/index.html for more information about the tax deduction, established under Section 190 of the Internal Revenue Code.

See Publication Number 946 at www.irs.gov/publications/p946/index.html for more information about the Section 179 deduction.

State ADA Tax Incentives

In some states, such as California, there may be additional tax programs to offset the cost of access improvements.  Please check with your tax advisor or contact your state tax authority to learn more about statewide incentives.

Note:  This information is intended for general informational purposes only and is not intended as financial, legal or tax advice.  We strongly encourage you to review this information with your tax advisor for eligibility and details.

START TYPING AND PRESS ENTER TO SEARCH