PAYDAY Workforce Solutions Blog

About Tax Credits for Disabled Employees

On May 22, 2015

Think about your workplace and place of business, the types of employees you have and want to hire, and the types of customers that come to your store, restaurant, or business. Are they able to move freely, safely, and easily through and around your facility? Can they get into and out of your place of business with a wheelchair, cane, walker, or crutches? Is your signage at wheelchair height and in Braille and audio formats? Is your business in any way part of the disability products industry, and if so, what kinds of obligations do you feel toward the disabled population?

Besides respecting and caring about disabled people who work at and visit your company as customers, hiring disabled employees and making your facilities accessible to those with mobility issues and physical disabilities creates benefits for all involved.

When employers hire disabled employees, they may be eligible for certain tax credits that benefit the bottom line. There are three types of federal tax disability credits available to businesses, and there may be additional state allowances as well. The Work Opportunity Tax Credit, Disabled Access Tax Credit, and Barrier Removal Tax Deduction are all well worth looking into when employers have or want to hire disabled employees and when they want to provide accessibility for customers.

Work Opportunity Tax Credit

The Work Opportunity Tax Credit is available to all businesses that employ people with disabilities. The employer gets a tax credit of 40 percent of the first $6,000 in wages paid to each new disabled employee for the first year of employment, up to a maximum credit of $2,400 per new hire. The credits are doubled if the company hires a disabled veteran. There are no limits to how many times a business can apply, but the employer can apply for the credit only after the disabled employee has worked 90 days or 120 hours using IRS Form 5884.

The disable employees must be part of an eligible target group. The eligible groups include unemployed veterans, temporary assistance for needy families recipients, food stamp recipients, designated community residents living in empowerment zones or rural renewal counties, vocational rehabilitation referred individuals, ex-felons, supplemental security income recipients, summer youth employees living in empowerment zones. These groups of employees must be certified with a vocational rehabilitation counselor or employment agency for the employer to get credit.

Disabled Access Tax Credit

The Disabled Access Tax Credit is an annual tax credit only available to small businesses. It’s a tax deduction of up to $5,000 that covers expenses like the purchase of adaptive equipment, sign language interpreters, or producing materials in an accessible format.

Small businesses qualify for the Disabled Access Tax Credit if they earned less than a million dollars or had fewer than 30 full-time employees in the previous year. The benefit is 50 percent of expenditures over $250 but not exceeding $10,250 for a credit up to $5,000. Small businesses can apply for this credit every year they meet the qualifications. The credit is applied for using IRS Form 8826.

Barrier Removal Tax Deduction

The Barrier Removal Tax Deduction is an annual tax credit of up to $15,000 available to all businesses. It relates to expenses like widening walkways, adding handicapped parking, and constructing or remodeling accessible restrooms. This tax deduction is for businesses that are removing obstacles that limit or restrict the mobility of disabled people, and can be used with the Disabled Access Tax Credit if all the requirements for both are met. Everything that qualifies for the Barrier Removal Tax Deduction is explained on The Americans with Disabilities website.

It’s very well worth the time to learn about and understand tax credits for hiring disabled employees. The tax breaks could save your company money, but doing the things to qualify for them will be even more beneficial to your business and the community. Hiring people with disabilities improves the diversity in your workplace, and making your business accessible to people with disabilities as well as providing accessibility aids for employees and customers, creates good will in your community and enhances your business reputation.


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