Tax Incentives

The Internal Revenue Code contains the following provisions for business:

Businesses hiring and accommodating people with disabilities may qualify for some of the tax credits and deductions that are offered through the IRS. This is a win-win situation for your business when you hire employees with disabilities; you are hiring dependable, highly skilled, and dedicated individuals. You can also save money through several smart financial benefits and tax credits.

The Work Opportunity Tax Credit or WOTC, is a federal income tax credit available to employers for hiring certain target groups of workers who have consistently faced significant barriers to employment.

WOTC joins other workforce programs that incentivize workplace diversity and facilitate access to good jobs for American workers. An employer is eligible for this credit for hiring individuals from any disability category. The Tax Credit for hiring other target groups (except summer youth employees) is up to $2,400 for each new hire; 40% of qualified first year wages for those employed 400 or more hours; 25% for those employed at least 120 hours (but less than 400). This is a one-time incentive per individual hired.

Disabled Access Tax Credit (Title 26, Internal Revenue Code, Section 44) provides a non-refundable credit for small businesses that incur expenditures for the purpose of providing access to persons with disabilities.

This credit also incorporates removal of communication barriers (interpreters, reader, taped text, JAWS, or other visual adaptive technology) to acquire or modify equipment and is up to $5,000. An eligible small business is one that earned $1 million or less or had no more than 30 full-time employees in the previous year; they may take the credit each and every year they incur access expenditures. Additionally, there is a separate incentive for small businesses that is up to $10,500.

The Architectural Barrier Removal Tax Deduction (Title Revenue Code, Section 190) encourages businesses of any size to remove architectural and transportation barriers to the mobility of persons with disabilities and the elderly.

Businesses may claim a deduction of up to $15,000 a year for qualified expenses for items that normally must be capitalized. This is an annual credit available for each year that an employer removes a physical, structural or transportation barrier (must own the facility or vehicle) up to $15,000 per year.

IRS Publication No. 907, providing information on these provisions, may be obtained by calling 1-800-829-3676 or by writing the IRS, Office of Chief Counsel, P.O. Box 7604, Ben Franklin Station, Washington, DC 20044.

More information available from the IRS: Tax Benefits for Businesses Who Have Employees with Disabilities
More information available from Department of Workforce Solutions: Department of Workforce Website
More information available from NMDVR: DVR-FODs
Printable Version