Technical Advisory Committee on Tax Measures for Persons with Disabilities
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Disability-Related Federal Personal Income Tax Measures
Disability Tax Credit
The disability tax credit (DTC)
provides tax relief to individuals who, due to the effects of a severe and
prolonged mental or physical impairment, are markedly restricted in their
ability to perform a basic activity of daily living as certified by a qualified
health practitioner, or would be markedly restricted were it not for extensive
therapy to sustain a vital function. Individuals are markedly restricted if,
all or substantially all of the time, even with therapy or the use of appropriate
devices and medication, they are blind or unable to perform a basic activity
of daily living or require an inordinate amount of time to perform the activity.
The basic activities of daily living are: walking; feeding or dressing oneself;
perceiving, thinking and remembering; speaking; hearing; and eliminating bodily
waste.
The DTC recognizes the impact of non-itemizable disability-related costs on
an individual’s ability to pay tax. For 2005, the credit is 16 percent
of $6,596, which provides a federal tax reduction of up to $1,055. This credit
can be transferred to a supporting spouse, parent, grandparent, child, grandchild,
brother, sister, aunt, uncle, nephew or niece of the individual. The credit
amount is fully indexed to inflation.