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Section 179D Tax Deductions

Improved incentives for energy efficiencies in commercial, government, and not-for-profit buildings.

If you are the owner of a commercial building, or involved in the design or construction of a government owned or not-for-profit building, you may qualify for newly improved tax deductions under the Inflation Reduction Act of up to $5.65 per square foot for energy-efficiency improvements.

EPAct 179D Deduction Levels

The maximum allowable benefit increased from $1.88/sf in 2022, to:

  • $5.65/sf in 2024
  • $5.36/sf in 2023

Prior to 2022,

  • In 2021, the maximum deduction was $1.82/sf
  • In 2006-2020, the maximum deduction was $1.80/sf
  • Overall building energy usage must be more efficient than standard by specified thresholds

What the EPAct 179D means for you:

  • Potential for immediate tax benefits in-lieu of depreciation. Building owners are not required to file amended tax returns for previous projects.
  • Deductions are for installation of, or improvements to:
    • Energy-efficient lighting,
    • HVAC, or
    • Building envelope.
  • Maximized benefit requires prevailing wage on construction for projects in service on 1/29/2023 and later
  • Safe Harbor exists for buildings that started construction prior to 1/29/2023 with no requirement of prevailing wage.
HVAC ventilation fan

Which properties qualify?

New construction and renovations include:

  • Commercial buildings of any size
  • Government buildings (federal, municipal, prisons, etc.)
  • Tax exempt entities such as K-12 schools, hospitals, places of worship, private schools & universities, not-for-profit owned buildings, Native American Tribal governments

What types of taxpayers can claim 179D?

  • Designer, engineer, or an architect of a Federal, State or municipal government building, or tax exempt building. Examples include:
    • Architects, Design/Build Contractors, Mechanical Engineers, Electrical Engineers, Building Automation and Building Controls firms
  • Commercial building owner
  • Commercial tenant who owns depreciating assets such as HVAC or lighting

Contact us for more information and to receive a complimentary estimate of benefits.

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  • Health Plans
    • Blue Edge Business Plans
  • R&D Tax Credits
    • Why Choose Us
    • Success Stories
    • Sample Tax Credit Estimate
    • How We Work with You
    • Qualifying Research Activities
    • Industries Served
      • CPAs
      • Concrete
      • Life Sciences
      • Linens & Textiles
      • Manufacturing
      • Software & Technology
  • Other Tax Strategies
    • Employee Retention Tax Credit
    • Cost Segregation Analysis
    • Section 179D Tax Deductions
  • Family CFO
  • Contact

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South Burlington, VT 05407-9367
tel (802) 865-4560

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