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- 179D ENERGY EFFICIENCY
- 179D Energy Efficiency
An accelerated deduction, up to $5.00 per square foot, for the construction or
retrofit of energy-efficient buildings.
An accelerated deduction, up to $5.00 per square foot, for the construction or retrofit of energy-efficient buildings.
- Overview
The Section 179D tax deduction is a valuable incentive designed to promote the construction or retrofit of energy-efficient buildings. It rewards building owners and building designers with an accelerated deduction for energy efficiency, calculated on a square-foot basis dependent on the evaluation of the HVAC system, lighting, and building envelope. Starting in 2023, the Inflation Reduction Act substantially increased the possible tax savings, raising the deduction up to $5.00 per square foot. Prior to the IRA, the deduction, created by the 2005 Energy Policy Act, allowed up to $1.80 per square foot.
Feasibility Review
We confirm the property likely qualifies before any work begins.
Inspection and Engineering Analysis
Our team conducts the required site visit and prepares the report with the required documentation.
Report and Certification
Your tax professional implements the report’s findings into the return and keeps the report on file as support for the deduction.
No. Qualifying activity shows up on production floors, in software teams, and in engineering departments that would never call themselves an ‘R&D department’ at all.
The credit rewards the process of experimentation, not the outcome. A failed or abandoned project can still qualify as long as it met the four-part test.
Yes. Qualified small businesses can apply up to $500,000 of the credit against payroll tax instead of income tax, which is often the difference that matters most for pre-revenue or early-stage companies.
Generally the last 3 open tax years. Any credit that exceeds your current tax liability can be carried forward up to 20 years.
Have questions specific to your situation?
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Curious if 179D Energy Efficiency applies to you?
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