Individuals with disabilities, as well as their caregivers and businesses that accommodate them, may be eligible for various tax benefits that can provide financial relief. Understanding these opportunities can help maximize savings and improve financial well-being. In this guide, we break down these benefits into three key categories: benefits for individuals with disabilities, benefits for parents of disabled dependents, and incentives for businesses that support accessibility.
Tax Benefits for Individuals with Disabilities
1. Additional Standard Deduction for Blind Taxpayers
If you are legally blind, you may qualify for a higher standard deduction when filing your federal tax return. In 2025, the additional deduction is:
- $1,600 per eligible individual for joint filers
- $2,000 for unmarried filers
To qualify, a taxpayer must be legally blind on the last day of the tax year, with vision no better than 20/200 in the better eye or a field of vision of no more than 20 degrees.
2. Exclusion of Certain Disability Payments
Some disability-related payments are not considered taxable income. This includes:
- Department of Veterans Affairs (VA) disability allowances
- Supplemental Security Income (SSI)
3. Impairment-Related Work Expenses
Self-employed individuals with disabilities may deduct impairment-related expenses necessary for employment, such as:
- Attendant care services at the workplace
- Workplace modifications
Employees were previously eligible for this deduction before the Tax Cuts and Jobs Act (TCJA), which suspended it through 2025.
4. Credit for the Elderly or Disabled
This nonrefundable credit, ranging from $3,750 to $7,500, is available for those:
- Aged 65 or older, or
- Permanently and totally disabled, with taxable disability income
Income limits apply, and those claiming this credit must be U.S. citizens or resident aliens.
5. Medical Expense Deductions
Medical expenses that exceed 7.5% of adjusted gross income (AGI) may be deducted, including:
- Health insurance premiums
- Hospital and doctor fees
- Prescription medications and glasses
- Medicare Part B and D premiums
6. Home Modifications for Accessibility
Home improvements made to accommodate disabilities may be deductible if they do not increase the home’s value. Eligible modifications include:
- Installing wheelchair ramps
- Widening doorways
- Modifying kitchen cabinets
If not claimed as a deduction, these expenses can be added to the home’s purchase cost to adjust the tax basis.
7. Achieving a Better Life Experience (ABLE) Accounts
Contributions to an ABLE account, designed for individuals with severe disabilities before age 26 (age 46 beginning in 2026), qualify for the Saver’s Credit, with a maximum credit of $1,000 for individuals or $2,000 for joint filers.
8. Earned Income Tax Credit (EITC)
The EITC is a refundable credit available to low- to moderate-income workers. In 2025, it can be as much as $649 for a single individual with no children. Many working individuals with disabilities qualify, and it does not impact eligibility for Social Security benefits, Medicaid, or housing assistance.
Tax Benefits for Parents of Children with Disabilities
1. Dependent Exemptions
A child with a permanent and total disability may be claimed as a dependent regardless of age if they:
- Cannot engage in substantial gainful activity due to a physical or mental condition
- Have a condition expected to last at least a year or result in death
2. Dependent Working at a Sheltered Workshop
Parents may claim a dependent exemption even if the child earns income from a sheltered workshop, provided the gross income does not exceed $5,200 in 2025.
3. Adoption Credit for Special Needs Children
Parents adopting a child with special needs may claim a tax credit of up to $17,280 in 2025, even without incurring adoption expenses.
4. Earned Income Tax Credit (EITC) for Parents
Parents of children with permanent disabilities may qualify for a higher EITC, which is inflation-adjusted annually. In 2025, the maximum credit is:
- $4,328 with one child
- $7,152 with two children
- $8,046 with three or more children
5. Child or Dependent Care Credit
This credit covers childcare expenses, including care for dependents with disabilities of any age, allowing parents to work. The credit covers 20%-35% of eligible care expenses up to:
- $3,000 for one dependent
- $6,000 for two or more dependents
6. Medical Conferences Related to Disabilities
Expenses for attending medical conferences related to a dependent’s chronic illness, including admission and transportation costs, may be deductible.
Business Tax Incentives for Accommodating Employees and Customers with Disabilities
1. Disabled Access Credit
Eligible small businesses can claim a tax credit for expenses incurred to comply with the Americans with Disabilities Act (ADA). Covered expenses include:
- Installing ramps
- Providing accessible parking
- Modifying restrooms
2. Barrier Removal Tax Deduction
Businesses can deduct up to $15,000 annually for expenses related to removing architectural and transportation barriers for disabled individuals.
3. Work Opportunity Tax Credit (WOTC)
This credit incentivizes hiring individuals from certain groups, including:
- Supplemental Security Income (SSI) recipients
- Vocational rehabilitation referrals
- Disabled veterans
Get Expert Tax Assistance
Navigating disability-related tax benefits can be complex. Our team at JS Morlu specializes in maximizing deductions, credits, and exclusions for individuals, families, and businesses. Contact us today for personalized tax planning and consultation!
