179D Energy Efficient Commercial Building Deduction
A Federal Tax Incentive Generating Additional Deductions up to $5.00 per SF
179D Energy Efficient Commercial Building Deduction
A Federal Tax Incentive Generating Additional Deductions up to $5.00 per SF
§179D ENERGY EFFICIENT COMMERCIAL BUILDING DEDUCTION
The §179D Energy-Efficient Commercial Buildings Deduction is a tax incentive designed to promote energy-efficient construction. Enhanced by the Inflation Reduction Act of 2022, the maximum §179D Deduction was significantly increased for buildings placed into service starting in 2023. To qualify for the §179D Deduction, the start of construction must begin before June 30, 2026, as mandated by the One Big Beautiful Bill Act of 2025.
- The deduction starts at 50 cents* per sqft for a 25% energy efficiency improvement over the baseline. For each additional percentage of energy reduction beyond 25%, the deduction increases by two cents per sqft, up to a maximum of $1.00* per sqft at 50% energy reduction.
- When construction meets or is exempted from the Prevailing Wage and Apprenticeship (PWA) requirements, the deduction starts at $2.50* per sqft and increases by ten cents per sqft up to a maximum of $5.00* per sqft.
*Deduction amounts increases annually based on inflation adjustments.
CASE STUDY
ICS successfully obtained over $4,000,000 in §179D Deductions for a national engineering firm who designed the entire HVAC system for multiple K-12 school buildings and offices.