The words in the tag should be more than a description. They should provide a text equivalent of the image. In other words, the tag should include the same meaningful information that other users obtain by looking at the image. In the example of the mayor’s picture, adding an “alt” tag with the words “Photograph of Mayor Jane Smith” provides a meaningful description.

The Department of Justice (DOJ) has specifically stated in rulings that websites should be designed so they are accessible to individuals who have vision, hearing, and physical disabilities. There’s a growing body of case law where the DOJ required companies to provide an ADA compliant website and levied hefty penalties when sites failed to measure up.

Toyota Motor Manufacturing, Kentucky, Inc. v. Williams,[72] was a case in which the Supreme Court interpreted the meaning of the phrase "substantially impairs" as used in the Americans with Disabilities Act. It reversed a Sixth Court of Appeals decision to grant a partial summary judgment in favor of the respondent, Ella Williams, that qualified her inability to perform manual job-related tasks as a disability. The Court held that the "major life activity" definition in evaluating the performance of manual tasks focuses the inquiry on whether Williams was unable to perform a range of tasks central to most people in carrying out the activities of daily living. The issue is not whether Williams was unable to perform her specific job tasks. Therefore, the determination of whether an impairment rises to the level of a disability is not limited to activities in the workplace solely, but rather to manual tasks in life in general. When the Supreme Court applied this standard, it found that the Court of Appeals had incorrectly determined the presence of a disability because it relied solely on her inability to perform specific manual work tasks, which was insufficient in proving the presence of a disability. The Court of Appeals should have taken into account the evidence presented that Williams retained the ability to do personal tasks and household chores, such activities being the nature of tasks most people do in their daily lives, and placed too much emphasis on her job disability. Since the evidence showed that Williams was performing normal daily tasks, it ruled that the Court of Appeals erred when it found that Williams was disabled.[72][73] This ruling is now, however, no longer good law—it was invalidated by the ADAAA. In fact, Congress explicitly cited Toyota v. Williams in the text of the ADAAA itself as one of its driving influences for passing the ADAAA.
The ADA itself holds different organizations to more/less stringent standards based on a host of factors, government funding being a major one. Government agencies themselves are usually held to the most severe standards. That said, while ADA has adopted WCAG as the defacto standard, from what I’ve seen it appears they’re going with AA compliance as the most reliable one. That said, we’ve done work with some organizations who’ve chosen to comply with AAA in an effort to be as buttoned up as possible from an accessibility and experiential perspective. We’ve also worked with some who have tighter budgers and aim for level A compliance and have a more “react and repair” mindset when they discover anything in their site that is giving someone hardship from an accessibilirt standpoint.
Costs for any project aren’t black and white, but having a general framework to approach the budgeting process will get you closer to an accurate estimate. Several factors will play a role in costs, and even just one change in scope can have a huge increase or decrease in budget. Bear in mind that it’s also important to find a designer you like and enjoy working with, and each designer will have his own rates, which will also greatly affect the end cost of your project.
Aloha Tatiana! I wish your questions had straightforward easy answers – and if you are government funded it kind of is. (See here: https://www.ada.gov/websites2_prnt.pdf) if you are not government funded, this is something that is currently being debated in the legal system. That being said, the WCAG 2.0 guidelines are a good set of guidelines to help protect yourself if you feel you should. (You can see more on WCAG here: https://www.yokoco.com/find-out-how-to-make-your-website-compliant/)
Another important consideration is that the ADA does not allow businesses to simply provide an alternative such as a phone number. Lastly, include accessibility issues as part of your website and mobile strategy. When new technologies are implemented or pages added, part of the process should include the implications for persons with disabilities. 
UPDATE: Since writing this post in August 2017, several important changes have taken place in the laws regarding ADA compliance for websites. On December 26, 2017, the Department of Justice announced that they have withdrawn the Obama-era Advance Notice of Proposed Rulemaking mentioned in this article which intended to require ADA website compliance. The DOJ’s withdrawal announcement stated, “The Department will continue to assess whether specific technical standards are necessary and appropriate to assist covered entities with complying with the ADA.”
Another important consideration is that the ADA does not allow businesses to simply provide an alternative such as a phone number. Lastly, include accessibility issues as part of your website and mobile strategy. When new technologies are implemented or pages added, part of the process should include the implications for persons with disabilities. 

Federal law isn't the only consideration for businesses. Additionally, each state interprets the law differently. Consider the case against Netflix in 2012. Lawsuits were brought in federal court in Massachusetts and California. Netflix was accused of violating the ADA by not offering "closed captioning" options for its Internet streamed movies. Illustrating the complexity of this issue, the courts reached completely opposite decisions. Massachusetts held that Netflix must comply with the ADA, while the California court found that Netflix did not fall under the ADA's definition of "public accommodation."
When collecting feedback, ask users what type of adaptive technologies they use. This will allow you to cater your website to your particular clientele, and will help you appoint resources toward the best compliance options. Navigating the Internet is particularly challenging for people with limited or no vision. Many blind people use specialized web browsers and software that works with standard web browsers, like Internet Explorer, that have features that enable users to maximize their Internet use and experience. This screen reading software reads the HTML code for websites, and gives the user a verbal translation of what is on screen.

ADA compliance isn’t a set-it-and-forget-it thing. Compliance standards must be followed and will evolve just as your website does. There are guidelines all website contributors must know to stay within ADA guidelines. It is generally not burdensome but it does require some web managers to change their workflows. For example, loading images up to your ecommerce site will always need some of that alternative text (alt tags) mentioned above.
Upon discovering issues faced by disabled government employees and the public, revisions to section 508 were made. The issues that were uncovered involved websites, documents, and software programs. As of January 2018, the updated 508 standards require all federal agencies and contractors to create web content accessible to all. The updated standards also include Website 508 compliance.
State and local governments will often post documents on their websites using Portable Document Format (PDF). But PDF documents, or those in other image based formats, are often not accessible to blind people who use screen readers and people with low vision who use text enlargement programs or different color and font settings to read computer displays.
I know there may have been concerns that the ADA may be too vague or too costly, or may lead endlessly to litigation. But I want to reassure you right now that my administration and the United States Congress have carefully crafted this Act. We've all been determined to ensure that it gives flexibility, particularly in terms of the timetable of implementation; and we've been committed to containing the costs that may be incurred.... Let the shameful wall of exclusion finally come tumbling down.[41]

Since enforcement of the act began in July 1992, it has quickly become a major component of employment law. The ADA allows private plaintiffs to receive only injunctive relief (a court order requiring the public accommodation to remedy violations of the accessibility regulations) and attorneys' fees, and does not provide monetary rewards to private plaintiffs who sue non-compliant businesses. Unless a state law, such as the California Unruh Civil Rights Act,[55] provides for monetary damages to private plaintiffs, persons with disabilities do not obtain direct financial benefits from suing businesses that violate the ADA.
The way a lot of people think about getting a new website is, they have a certain amount of money and they think, If I pay less money for a website, I'll have extra money left over, therefore I win. And so they'll go and get a Square Space or a Wix or a Go Daddy website, and they'll think because they've saved money they're coming out ahead of the deal.
The words in the tag should be more than a description. They should provide a text equivalent of the image. In other words, the tag should include the same meaningful information that other users obtain by looking at the image. In the example of the mayor’s picture, adding an “alt” tag with the words “Photograph of Mayor Jane Smith” provides a meaningful description.
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