The Energy Policy Act of 2005 (EPAct) created the §179D Energy Efficient Commercial Building Deduction as a tax incentive to encourage energy efficient design. It applies to both newly constructed and renovated buildings targeting HVAC and lighting systems as well as the building envelope. The §179D Deduction is available to commercial building owners as well as engineers, architects, and other designers of buildings owned by government agencies and other tax-exempt entities.» Learn about the §179D Deduction for 2022 and prior.

§179D DEDUCTION BENEFITS AND REQUIREMENTS

● When constructed with prevailing wage and apprenticeship requirements, the §179D Deduction starts at $2.50 per square foot when compared to the ASHRAE Reference Standard 90.1 that was in effect for four years prior to the in-service date of the building. Each additional percentage of energy reduction will increase the deduction by $.10, up to $5.00 per square foot.If prevailing wage requirements are not met, the §179D Deduction is $.50 per square foot. Each additional percentage of energy reduction will increase the deduction by $.02 per square foot, up to $1.00 per square foot.

● If prevailing wage requirements are not met, the §179D Deduction is $.50 per square foot. Each additional percentage of energy reduction will increase the deduction by $.02 per square foot, up to $1.00 per square foot.

Our Service

Our team of engineers and tax professionals will perform free assessments to prequalify your project. Our §179D Deduction service includes:

Performing modeling and building inspections

Assisting with amended tax returns or filing a change in method of accounting

Reviewing construction documents

Facilitating project scope interviews with the design team

Preparing certificates of energy efficiencies

Obtaining allocations from government building owners

Coordinating with your tax preparer

Providing complementary audit support

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$179D DEDUCTION FOR 2022 AND PRIOR

For buildings placed in service from 2006 through 2022, the §179D Deduction allows building owners to claim up to $1.80 per square foot. In the case of a taxable year beginning after 2020, the $1.80 per square foot will be adjusted by inflation ($1.82 for 2021 and $1.88 for 2022).

To qualify, newly constructed or renovated buildings must meet or exceed the ASHRAE standards for HVAC, building envelope and interior lighting. The §179D Deduction is available to commercial building owners as well as engineers, architects, and design contractors of government owned buildings. The building can be newly constructed or retrofitted with system improvements. Parking garages and residential buildings with four or more stories may also be eligible.

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