What is the §179D Deduction?

The Commercial Buildings Energy-Efficiency Tax Deduction, more commonly referred to as the §179D Deduction, was enacted in 2005 with the passing of the Energy Policy Act. The Deduction was enacted to reward Architects, Engineers, and subcontractors performing energy-efficient projects in the United States on tax-exempt or private-sector properties or buildings.

Under §179D, companies may receive as much as $1.88 per square foot when making improvements surpassing current energy thresholds that result in creating a more energy-efficient building, Due to current changes made as part of the Inflation Reduction Act, the deduction maximum reward has jumped from a $1.88 per square foot (for projects placed into service prior to 2022) to $5.00 per square foot (for projects placed into service 2023 and beyond) for qualified projects.

Qualification Requirements

Eligible Improvement

Architecture and engineering firms are typically responsible for designing and fitting a buildings technical specifications.

Technical specifications can be seen as:

  • Building envelope
  • Lighting Systems
  • Heating, ventilation, and air conditioning (HVAC) systems

Tax Exempt Buildings

  • Hospitals
  • Churches
  • Schools/Universities
  • Airports
  • Military Bases
  • Libraries
  • Prisons
  • Non-profit

How Much is the Deduction?

  • 2022 and Prior
    Up to $1.88 per sq ft
  • 2023 and Forward
    Up to $5.00 per sq ft

Claiming the §179D Deduction

Reduce Taxable Income

  • The §179D deduction reduces your taxable income for the year claimed.

Short/Long Term Saving

  • The §179D deduction allows the designer short-term savings on their taxable income that year.
  • §179D principles also promote long-term savings for the client by because of the lower energy consumption year after year.

Contact us today

Ready to elevate your firm’s capabilities and client service? Contact EPSA today to explore how our partnership can be a catalyst for your success. Let us navigate these incentives together, ensuring your firm remains at the forefront of innovation and expertise.

Rachel Lindblade
[email protected]

Review this one-page summary

Explore our dedicated one-pager on the §179D deduction to access detailed information about eligibility criteria and the benefits it offers. Learn how this deduction can enhance energy efficiency in your projects and discover the financial advantages it brings.