The Disabled Access Credit and Section 190 Deduction

How it works

Section 44 and Section 190 were each enacted or reset by the same 1990 act, and they do two different jobs on one accessibility project. I treat them as a single strategy because a real project almost always ends up using both.

Section 44 is a credit, not a deduction: half of the eligible access spending that falls between $250 and $10,250 for the year. The band is $10,000 wide, so the credit itself is capped at $5,000 no matter how large the project gets, and the first $250 of spending earns nothing at all.

Section 190 is a separate election that lets a business expense its architectural and transportation barrier removal costs right away instead of capitalizing and depreciating them, subject to its own annual limit of $15,000. It carries no size test of its own. A business too large for Section 44 can still take the Section 190 deduction when it removes a barrier.

Neither dollar figure has ever moved with inflation. Section 44 has not been amended since it was added in November 1990, and Section 190's current limit dates to that same 1990 law. The One Big Beautiful Bill Act, which I cover more broadly in my guide to the 2025 reconciliation law, left both sections untouched.

Neither piece is automatic. Filing Form 8826 is what elects the Section 44 credit for the year; there is no credit without it. The Section 190 deduction is a second, independent election, made by claiming it as a separately identified item on a return filed by its due date, including extensions. Miss that date and the election is gone for the year, with no do-over.

What this is worth in Florida

Every dollar of this is federal. Florida has no individual income tax and does not tax S corporation or partnership income at the owner level, so there is no state credit sitting on top of the federal one and no state deduction to protect. If this is ever pitched on a Florida tax angle, that angle does not exist; the benefit runs through the federal return alone.

Who this applies to

Eligible small business status turns on the year before the spending, not the year of the project itself, and it is a two-part test where the second part only opens up if the first one fails.

• The receipts test. Gross receipts, net of returns and allowances, at or under $1,000,000 for the preceding tax year. A predecessor's receipts history carries over, so buying an existing practice does not reset the clock.
• The employee fallback. Available only to a business the receipts test does not cover: 30 or fewer full-time employees in the preceding year, counting anyone who worked at least 30 hours a week for 20 or more weeks. This is what lets a busier practice with several employees still get in the door.
• Aggregation and pass-throughs. A controlled group or businesses under common control count as a single taxpayer, and the $5,000 limitation is divided among them. A partnership or S corporation applies that same $5,000 cap twice: once at the entity level and again at each partner or shareholder's own return. That is a cap run at two levels, not a cap doubled.
• Who this does not fit. A facility first placed in service after November 5, 1990 loses the barrier removal category entirely, for reasons I cover in the next section. A business with little or no federal income tax liability for the year gets little current value from a nonrefundable credit, though an unused amount is not simply lost. And a home-based or online business with no facility the public ever enters has nothing here to work with in the first place.

In my practice the businesses this actually reaches are specific and recognizable. A dental or medical practice working out of an older suite is the classic case; the leading court decision on this credit is built on exactly that fact pattern, and a practice with collections well above the receipts threshold still qualifies through the employee fallback at 30 or fewer full-time staff. A retail storefront or restaurant in a pre-1990 strip center or an older downtown building is another common fit, and Mount Dora, Eustis, Tavares, Sanford, and the older Orlando corridors carry a deep stock of it. A salon, barbershop, or day spa is a third, and it is often the same client I would already be evaluating for the FICA tip credit on tip income.

What it requires

The expenditure has to be paid to help the business comply with the Americans with Disabilities Act as it read on November 5, 1990. That sounds like a formality. It is the actual gate the credit lives or dies on, because it asks a factual question: was this business genuinely out of compliance before, and does this specific expenditure fix it. A business that upgrades equipment it did not need for compliance gets nothing, regardless of how useful the new equipment turns out to be.

The statute lists five kinds of eligible spending: removing architectural, communication, physical, or transportation barriers; providing interpreters or other ways of making audio material accessible to people with hearing impairments; providing readers, taped text, or comparable help for people with visual impairments; acquiring or modifying equipment for people with disabilities; and other similar services or equipment. Only the first category, physical barrier removal, carries the facility-age bar, and it is unavailable entirely at any facility first placed in service after November 5, 1990. That bar looks at the building's age, not whether this year's project would count as new construction. The other four categories are not subject to it, so a business in a newer building can still generate a credit by buying assistive equipment or hiring an interpreter. That is an escape from the age bar only. It does nothing for the purpose test above, which is where these claims actually fail.

Two more conditions sit on top of the purpose test. The spending has to be reasonable, not more than the job actually needed. And the business has to be able to show the finished work meets accessibility standards tied to the Architectural and Transportation Barriers Compliance Board. No regulation was ever written under Section 44 itself to define those standards; the only regulation on the books that plausibly fills that gap was written for the companion Section 190 deduction, and it is adapted from a 1971 industry specification, not the 2010 federal design standards Florida's own building code actually requires. Meeting Florida's current construction standard is still the right move. It does not answer the separate federal question of whether the expenditure was needed to close an actual compliance gap.

None of this matters unless there is tax to apply it against. The disabled access credit is one piece of the general business credit, and the general business credit is capped at the business's actual tax liability for the year, reduced first by certain other credits including the child tax credit. A profitable year with real tax owed absorbs a $5,000 credit without friction. A year where other credits have already brought the tax bill close to zero leaves little or nothing for this credit to offset in that year. An amount that cannot be used currently is not gone: it carries back one year and forward twenty, tested against the same limitation again each year it lands.

What you need to document

Substantiation is where this credit is actually won or lost, more than the arithmetic ever is. The file has to show what the business genuinely could not do for a disabled customer or patient before the project, and exactly what the expenditure changed.

Contemporaneous evidence of the compliance gap

A file note, made before or during the project rather than reconstructed later, describing what the business could not accommodate and how the expenditure closes that specific gap. This is the entire holding of the leading case on this credit.

Invoices segregated by category

Barrier removal costs kept separate from interpreter, reader, or equipment costs, because only barrier removal carries the facility-age bar and only barrier removal is eligible for the Section 190 deduction.

The facility's first-placed-in-service date

Established before the project is priced, since it decides whether the barrier removal category is available at all.

Proof the standards were actually met

Records showing the finished work meets a recognized accessibility specification, such as a ramp slope, a door clearance width, or a compliant restroom stall, rather than a general statement that the space is more accessible now.

The Section 190 election itself

Claimed as a separately identified item on a return filed by its due date, including extensions. The regulation's own recordkeeping rule for this election calls for the architectural plans, contracts, and building permits behind the work.

Where it goes wrong

The two reported Tax Court decisions on this credit both ended in a loss for the taxpayer, and neither one turned on the arithmetic.

What two Tax Court losses have in common

In Fan v. Commissioner, a dentist bought an intraoral camera system for a little over $9,000 and claimed roughly $4,879 of credit. The Tax Court denied it because the practice was already communicating effectively with hearing-impaired patients using handwritten notes, so the new system did not enable compliance that already existed, and the court noted the system had general usefulness to every patient rather than serving as a replacement for those notes. The lesson is specific: a business already in compliance gets nothing for upgrading, no matter how much better the new equipment is. General-purpose practice equipment with an accessibility story attached does not clear this test.

In Arevalo v. Commissioner, a taxpayer paid $10,000 for title to two pay telephones serviced and operated entirely by someone else's company, and claimed both depreciation and the disabled access credit. He lost both: he had no benefits or burdens of ownership, and his arrangement never obligated him to comply with the ADA in the first place, since he owned, leased, and operated nothing himself. The court declined to impose a penalty in that case but warned that sanctions may be appropriate where a petition is filed with no intention of prosecuting it and merely to delay collection. Packaged products that promise a fixed credit for a passive purchase are the pattern behind that case, and I treat it as a warning sign.

The recurring mistakes

• Treating the facility-age bar as a question about this year's project instead of the building's age. The bar looks at when the building was first placed in service, not whether this year's work counts as new construction.
• Reducing the Section 190 deduction by the wrong amount. Only the credit amount itself is off limits to a second benefit, not the full $10,000 band the credit was computed from. Cutting the deduction by the larger number gives away real deductions for nothing.
• Citing Treas. Reg. sec. 1.190-1's $25,000 figure for the Section 190 cap. That figure was overtaken twice, by a 1984 increase to $35,000 and a 1990 cut to $15,000, and the regulation was never updated to match the statute. The statute governs.
• Missing the Section 190 election deadline. It has to be made on a return filed by its due date, including extensions, and it is irrevocable once that date passes.
• Forgetting that the Section 190 deduction is entity-level. It trims the taxable income the qualified business income deduction is computed from, so the two provisions interact even though neither one controls the other.
• Promising a client a fixed credit amount before checking liability. This is the mistake that damages a relationship rather than a return, because the number quoted and the number actually delivered can differ substantially.

A situation where this comes up

The version I see most often is a business that already has an obvious accessibility gap and simply has not addressed it yet: an older medical suite with a step at the entrance, a retail storefront whose restroom has never been retrofitted, a salon in a downtown building from the 1970s. Nothing about how the business operates has to change for this credit to become available. The trigger is usually a project the owner is already planning for reasons that have nothing to do with taxes.

What decides the outcome is whether the file exists before the work happens, rather than getting assembled at filing time. A dated note describing what the business could not do before, a segregated set of invoices, and a recorded first-placed-in-service date turn this from a number I quote cautiously into a credit I can defend if it is ever questioned.

The version that concerns me is the file assembled after the fact, once a return is already in preparation and someone remembers the ramp that went in a year earlier. By then there is no contemporaneous note describing the compliance gap, no segregated invoice, and no record of when the building was first placed in service. The law has not changed. The ability to defend the position has. I would rather have that conversation with a client before the contractor is hired than after the return is filed.