TL;DR: For most businesses, website design costs qualify as an ordinary and necessary business expense and are deductible. The catch is timing. The IRS treats design and build costs as a capital expense, so you depreciate them across their useful life instead of writing the whole thing off in year one. Ongoing maintenance and updates work differently and aren't depreciated. Small businesses that pay to make a site ADA accessible may also qualify for the Disabled Access Credit, worth up to $5,000. Talk to your own tax professional before you act on any of this.
A website is a basic requirement for most businesses now, and building one costs real money. That leads to a fair question at tax time: can you deduct it? In most cases, yes. And if you spent money making the site ADA accessible, you may also qualify for a tax credit under Section 44 of the IRS tax code.
What counts as a website design cost
These are the expenses tied to creating and maintaining a website: fees paid to designers or developers, purchases of themes, plugins, and other tools, and the cost of maintenance and updates.
How the deduction works
The IRS lets businesses deduct "ordinary and necessary" expenses for their trade or business. The expense has to be standard and accepted in your industry, and helpful and appropriate for your business. Website design costs usually clear that bar.
The wrinkle is classification. Website design is a capital expense rather than a regular operating expense, so you can't deduct the full cost in the year you paid it. It gets depreciated over time instead.
Depreciating the cost
Depreciation spreads the cost of a capital asset across its useful life. The specific period depends on the nature of the expense.
Say you paid a developer $10,000 to build a new site and depreciate it over five years. You'd deduct $2,000 per year for five years rather than the full $10,000 up front.
Which costs depreciate and which don't
Not everything gets depreciated. The IRS treats costs directly tied to creating the website as depreciable, including design fees and theme costs. Ongoing maintenance and update costs aren't capital expenses, so they don't get depreciated.
Separately, paying to make your website ADA accessible can put you in range of a tax credit under Section 44.
What ADA accessibility means
There is no federal regulation that spells out exactly what a private business's website has to do to satisfy the Americans with Disabilities Act. What courts and settlements measure against instead is the Web Content Accessibility Guidelines, or WCAG, the widely accepted technical standard.
Building a site to WCAG is what people mean by making it “ADA accessible”: content that works with screen readers for visitors with visual or hearing impairments, and functionality that works by keyboard for visitors with mobility impairments. That is the accessibility work the credit is meant to offset.
The Disabled Access Credit
The Disabled Access Credit is not new. Congress created it under Section 44 of the tax code in the Omnibus Budget Reconciliation Act of 1990, the same year the ADA became law. What has changed is why it matters for websites. A wave of website-accessibility lawsuits since 2017, starting with the first federal trial verdict in Gil v. Winn-Dixie, moved web accessibility from a nice-to-have to a real legal exposure. The credit was written for physical access, but it applies to the cost of making your website accessible too.
The credit is worth up to $5,000. It covers 50 percent of your eligible access spending above $250, up to a ceiling of $10,250 in a year. The first $250 doesn't count and spending above $10,250 doesn't either, so the most you can claim is 50 percent of $10,000, which is $5,000.
To qualify, your business has to meet one of two size tests for the previous tax year: gross receipts of $1 million or less, or 30 or fewer full-time employees. You also have to actually incur the access expense, such as paying a developer to implement accessibility features.
How to claim it
File IRS Form 8826, Disabled Access Credit, with your tax return, and claim 50 percent of your eligible expenses within the limits above.
A necessary disclaimer
This is general information, not tax advice. Your circumstances are specific to you, so talk to your own tax professional before acting on any of it.
FAQs
Can I deduct the full cost of my website in the year I paid for it?
Generally no. The IRS treats website design and build costs as a capital expense, so they're depreciated across their useful life rather than deducted all at once.
What website costs are depreciable?
Costs directly tied to creating the site, such as design fees and theme purchases. Ongoing maintenance and update costs aren't treated as capital expenses.
What is the Disabled Access Credit worth?
Up to $5,000. It covers 50 percent of eligible access spending above $250, up to a ceiling of $10,250 in a year, which works out to a maximum credit of $5,000.
Who qualifies for the Disabled Access Credit?
Small businesses that meet one of two size tests for the prior tax year: gross receipts of $1 million or less, or 30 or fewer full-time employees. You also have to incur the access expense, such as paying a developer to add accessibility features.
How do I claim the credit?
File IRS Form 8826, Disabled Access Credit, along with your tax return. Check the specifics with your own tax professional first.
