Only 32.3% of workers with a disability are in the workforce even though sixty to eighty percent of people would like to work. Employment rates among individuals with disabilities are suffering. Barriers are preventing individuals with a disability to gain employment and contribute to the workforce. Some employers are hesitant to take on the expense and legal implications of employing an individual with disabilities- many of these businesses are also unfamiliar with the financial resources available to them. Congressional efforts to re-incentivize the hiring and retaining of employees with disabilities have come to fruition.
The Disability Employment Incentive Act (DEIA) was approved on July 24, 2018 which will provide employers of disabled workers with a significant increase tax benefit. The act also includes and increase in the monetary amount of tax incentives for businesses, raising the size and revenue limits for small businesses, and expanding the pool of targeted groups. This will not take effect until after December 31, 2018, the Act has great potential to spark renewed interest in hiring and retaining disabled employees.
What do These Changes Mean for Employers?
Under the Work Opportunity Tax Credit, tax credits to employers will see increased limits. The credit for qualified employees will remain at 40% of the employee’s first year salary, but the countable salary limit will increase to $12,500 (previously $6,000). In addition, employers that retain qualified employees for a second year will see a credit on 20% of the employee’s salary, also capped at $12,500.
The limitations imposed by the Disability Access Expenditures Tax Credit on the size and gross receipts of small businesses will increase significantly. Small businesses were previously limited to $1 million in gross receipts- this amount is now tripled. The maximum tax credit will also double to $10,000.
There will be significant improvement in the Architectural and Transportation Barrier Tax Credit. Promoting ADA compliance, this credit will provide employers with up to $30,000 in credit for making accessibility modifications to existing structures. These expenses could include relevant modifications to physical barriers in facilities or transportation vehicles, as well as expenses to make technology accessibility.
Who Are Qualified Individuals with Disabilities?
This Act applies to employers who hire a person receiving Supplemental Security Income (SSI) Benefits, a person who is receiving Social Security Disability Insurance (SSDI) benefits, or a person who was referred to them though a state Vocational Rehabilitation agency.
Greater expenses for employers could arise with hiring individuals with disabilities. Despite anti-discrimination laws and required compliance with accommodations, employers are often hesitant to take on the potential financial costs of accommodating employees with disabilities. Having these fears can stifle opportunities for many individuals to gain access to the workforce. The DEIA provides greater incentives for employers to consider qualified candidates who have a disability.