The 179D Tax Deduction, introduced by the Energy Policy Act of 2005 (EPAct), provides a substantial tax incentive for commercial building owners and designers who invest in energy-efficient building improvements. With updates from the Inflation Reduction Act, effective as of January 1, 2023, this deduction has become even more valuable, offering potential savings of up to $5.00 per square foot.
The 179D Tax Deduction is an energy tax incentive designed to encourage the construction or renovation of energy-efficient commercial buildings. To qualify, a building’s energy consumption must be reduced by at least 25% compared to the most recent ASHRAE Standard 90.1 determination, no later than four years prior to the building’s placed-in-service date.
Begins at $0.50 per square foot for a 25% energy reduction (ER), increasing by $0.02 for each additional percentage point, up to $1.00 per square foot.
Available for projects meeting prevailing wage requirements, starting at $2.50 per square foot for a 25% ER and increasing by $0.10 per percentage point, up to $5.00 per square foot.
This deduction applies to commercial buildings constructed or renovated after January 1, 2023, and is available through December 31, 2032.
The best candidates for the 179D Tax Deduction are commercial buildings or upgrades covering at least 50,000 square feet. This includes office buildings, industrial facilities, warehouses, and apartment buildings of four stories or more. Energy-efficient upgrades can range from lighting and HVAC systems to water heating and building envelopes.
Owners of newly constructed or upgraded buildings can claim deductions for improvements to HVAC systems, building envelopes, and interior lighting.
Tenants who make energy-efficient upgrades, such as lighting and HVAC remodels, may also be eligible for valuable tax deductions.
Architects, engineers, and energy consultants who design energy-efficient systems for public or government buildings may have tax deductions allocated to them.
At JR Tax Advisory Group, we specialize in maximizing the benefits of the 179D Tax Deduction. Our services include comprehensive energy system modeling analysis, essential for fulfilling IRS requirements. This analysis compares your building’s current energy consumption with baseline consumption, ensuring you receive the maximum deduction available.
We perform detailed energy modeling for your building's green energy systems, ensuring compliance with IRS guidelines.
From the initial consultation to the final filing, we guide you through every step, ensuring all certifications and procedures are thoroughly documented.
Our experts work to secure the highest possible deductions, reducing your tax burden while enhancing your building’s energy efficiency.
Unlock significant savings and contribute to a more sustainable future with the 179D Tax Deduction. Contact JR Tax Advisory Group to learn more about how we can help you maximize your benefits. Let’s partner together to maximize your savings and create a more sustainable future.