Form 8826: Disabled Access Credit Rules for Small Businesses

The disabled access credit can reduce a qualifying small business's federal income tax by up to $5,000 for eligible accessibility expenses. You claim it using Form 8826, and the credit can apply to more than physical changes to a building.

Eligibility depends on your business's size in the preceding tax year and the purpose of the expense. The calculation also excludes the first $250 of eligible costs.

Here's how to identify qualifying expenses, calculate the credit, and account for it on your return.

Key takeaways

• A business can qualify based on either its prior-year gross receipts or its number of full-time employees.
• The credit equals 50% of eligible expenses above $250, up to a maximum credit of $5,000.
• Eligible costs can include qualified interpreters, accessible materials, equipment, and certain barrier-removal work.
• The credit is nonrefundable, and you can't claim the same dollar of expense twice as a tax benefit.

What Form 8826 does

Form 8826 is the federal form businesses use to calculate the Disabled Access Credit. The credit helps eligible small businesses offset the cost of providing access to people with disabilities under applicable Americans with Disabilities Act, or ADA, requirements.

A tax credit reduces tax liability, while a deduction generally reduces taxable income. That distinction matters when you're estimating the tax effect of an accessibility project. A $1,000 credit, if fully usable, reduces eligible tax by $1,000. A $1,000 deduction reduces the income on which tax is calculated.

The credit is part of the general business credit . As the IRS explains on its Form 8826 overview, the form calculates the disabled access component before applicable general business credit limits are applied.

You can claim the credit in more than one year if you meet the rules and have qualifying expenses in each year. Spending in an earlier year doesn't by itself create a credit for a later year.

Which businesses qualify for the disabled access credit?

You need to satisfy one of two size tests for the tax year before the year you claim the credit. You don't have to meet both.

The gross receipts test

Your business meets this test if its gross receipts for the preceding tax year were $1 million or less . The calculation includes receipts of a predecessor business where applicable.

For example, if a business had $900,000 in gross receipts in the preceding year, it meets the receipts test even if it had more than 30 full-time employees. The accessibility costs must still qualify separately.

Gross receipts aren't the same as net profit. Don't substitute the amount left after operating expenses for the receipts figure when applying the test.

The full-time employee test

A business also qualifies if it had no more than 30 full-time employees during the preceding tax year, even if its gross receipts exceeded $1 million.

For this test, a full-time employee generally works at least 30 hours per week for 20 or more calendar weeks during the tax year. Count employees under that definition rather than assuming every person on payroll counts as full-time.

Related businesses may need to apply common-control rules when determining eligibility. The size test can therefore require more than looking at one company's payroll or receipts in isolation.

Which accessibility expenses may qualify?

Eligible access expenditures are reasonable and necessary amounts paid or incurred to comply with applicable ADA requirements. The Form 8826 instructions identify several categories, but the reason for the expense matters as much as its accounting label.

Services, materials, and equipment

Qualified services can include sign language interpreters or other methods of making audio materials available to people with hearing impairments. Similarly, qualified readers, taped texts, and other methods of providing visual materials to people with visual impairments may qualify.

The credit can also cover the purchase or modification of equipment or devices for people with disabilities. For example, an eligible device that provides access to a business service may qualify if the expenditure meets the form's requirements.

These costs can arise while serving customers or accommodating employees. Keep enough detail to show how the service or device addresses an accessibility need.

Barrier removal and the building date

Some expenses to remove architectural, communication, physical, or transportation barriers may qualify. Examples can include eligible work that makes a facility more accessible to people with disabilities.

There's an important date restriction: barrier-removal expenses for a facility first placed in service after November 5, 1990 , don't qualify for this credit. A newer business operating in an older building should consider when the facility first entered service, not merely when the business moved in.

A general renovation doesn't automatically qualify. Separate accessibility work from unrelated improvements, such as ordinary redecorating, before calculating eligible costs. The facility date restriction applies to barrier removal, so don't assume it disqualifies every other category of expense.

How to calculate the credit

Form 8826 applies a $250 floor and a $10,000 limit before calculating the credit. First, total your eligible access expenditures for the year. Next, subtract $250 and use the smaller of the remaining amount or $10,000. Multiply that figure by 50%.

The maximum credit is $5,000 . You reach it with $10,250 in eligible expenditures because the first $250 doesn't count toward the calculation.

The IRS provides an overview of accessibility tax benefits that also distinguishes the credit from the separate barrier-removal deduction.

Worked example

Suppose an eligible business pays $6,000 for qualifying accessibility expenses during the tax year. The calculation is:

The business calculates a $2,875 credit before applying any general business credit limitations. If its eligible expenses were $250 or less, there would be no credit. At $10,250 or more, the calculation reaches the $5,000 cap.

The calculated amount isn't necessarily the amount usable on that year's return. The nonrefundable and general business credit rules affect how much can reduce tax.

How to claim the credit with Form 8826

Start with records for the credit year and the preceding year's size test. Then complete Form 8826 using the qualifying expenses paid or incurred for the year.

Complete the calculation

Form 8826 asks you to establish eligibility and enter eligible access expenditures. Follow the form's calculation to subtract $250, apply the $10,000 limit, and calculate 50% of the eligible amount.

The form also accounts for disabled access credits received from partnerships or S corporations. Keep the business's own expenditure calculation separate from any credit reported to it by another entity.

The form is filed with the applicable federal return. For a sole proprietor, preparing it alongside the business income and expense records helps keep the credit calculation tied to the return.

Report the credit on the return

Partnerships and S corporations generally report the credit through Schedule K so it can pass through to their owners. Other taxpayers generally report the credit through Form 3800, General Business Credit, subject to that form's rules.

An owner whose only disabled access credit comes from a partnership or S corporation generally doesn't need to file a separate Form 8826 for that pass-through amount. The owner uses the information reported by the entity when preparing the return.

For sole proprietors, our Schedule C tax checklist can help organize the business records that accompany a federal return.

How the credit interacts with other tax benefits

An accessibility project can raise several tax questions at once. You may have an expense that qualifies for a credit, a deduction, or capital treatment, but you can't receive overlapping benefits for the same amount.

Deductions and asset costs

When you claim the disabled access credit, reduce the relevant deduction or amount capitalized by the credit. You can't deduct the credit amount as though it were an additional business expense.

In the $6,000 example, the calculated credit is $2,875. The remaining $3,125 requires its own tax treatment based on the nature of the expenditure. It isn't automatically an immediate deduction: equipment or building improvements may have different treatment.

Our guide to small business tax deductions covers other common expenses that may affect your return.

The Section 190 deduction

Section 190 offers a separate deduction for eligible architectural and transportation barrier-removal expenses, with an annual limit of $15,000. A business may be able to use both benefits when an expense meets the requirements for each.

However, the credit and deduction can't both cover the same dollar. The IRS discusses this interaction in its guidance on tax benefits for accessibility accommodations.

Because the two provisions have different eligibility rules, an expense that qualifies for one doesn't automatically qualify for the other. Keep a calculation showing how each benefit applies.

Records to keep for your claim

Good records should explain both the amount spent and why the expenditure qualifies. An invoice that says only "renovation" may leave too much unanswered at tax time.

Keep contracts, itemized invoices, payment records, and descriptions of the accessibility work or service. For barrier removal, retain information supporting when the facility was first placed in service. Also keep the prior-year receipts and payroll information used for the small-business test.

Reconcile vendor credits and refunds against the original expense. If a supplier reduces the price of an eligible device, your records should show the adjustment rather than leaving the original charge and credit disconnected.

For a larger project, separate eligible work from unrelated improvements in your bookkeeping. A tax preparer can then trace the Form 8826 amount back to the supporting documents without treating the entire project cost as eligible by default.

Frequently asked questions

Can a sole proprietor claim the credit?

Yes. A sole proprietor can qualify if the business meets a prior-year size test and has eligible access expenditures. The credit isn't limited to corporations.

Does the credit pay for all accessibility costs?

No. The calculation excludes the first $250 of eligible expenses and covers 50% of the next $10,000. The maximum credit is $5,000, even when eligible spending exceeds $10,250.

Can the credit produce a tax refund by itself?

The disabled access credit is nonrefundable. It can reduce eligible federal tax liability, but it doesn't create a refund simply because the calculated credit is larger than the tax it can offset.

Make accessibility spending easier to document

Form 8826 can turn eligible accessibility spending into a federal tax credit, but the amount depends on both the expense rules and your available tax liability. The $250 floor and $5,000 cap make the calculation straightforward once you've identified qualifying costs.

Keep the invoices, eligibility records, and tax calculations together. If you're planning a project or preparing a business return, we can help you review how the credit fits your records and other tax benefits.