179D: Energy Efficient Commercial Buildings Deduction
Internal Revenue Service (IRS)
To provide a tax deduction to some building owners and tenants who place in service energy efficient commercial building property (EECBP) or energy efficient commercial building retrofit property (EEBRP).
Applicant and/or Project Eligibility Requirements
Beginning January 1, 2023, the deduction is available to: - Owners of qualified commercial buildings - Designers of EECBP/EEBRP installed in buildings owned by specified tax-exempt entities, including certain government entities, Indian tribal governments, Alaska Native Corporations, and other tax-exempt organizations
Under the Inflation Reduction Act, energy savings must be measured against the latest ASHRAE standard affirmed by the Secretary of Treasury at least 4 years before the property is placed in service. EECBP and EEBRP must be installed on or in a qualified building as part of the interior lighting systems; the heating, cooling, ventilation, and hot water systems; or the building envelope.
Beginning in 2023, if local prevailing wages are paid and apprenticeship requirements are met, an increased maximum deduction applies. The maximum amount increases to 5 times the savings per square foot amount.
Governmental and other tax exempt entities should consult with contracted design teams or prospective teams to indicate their interest in leveraging energy efficient designs for buildings they own and maintain. One way to indicate preference or requirement is through requests for qualifications (RFQs) or requests for proposals (RFPs) issued by the entity seeking bids that would intend to leverage this deduction.
Under the Inflation Reduction Act, energy savings must be measured against the latest ASHRAE standard affirmed by the Secretary of Treasury at least 4 years before the property is placed in service. For buildings that begin construction on or after January 1, 2023, and have energy efficient property placed in service on or after January 1, 2027, ASHRAE Standard 90.1-2019 applies.