The §179D Energy Efficient Commercial Buildings Deduction has been adjusted for inflation in 2026, offering enhanced tax incentives for energy-efficient new construction as well as retrofits. To qualify, construction of a significant nature must begin before June 30, 2026, but there is no deadline for construction to be completed....
The Inflation Reduction Act of 2022 introduced powerful energy-related tax incentives under Sections 179D, 45L, and 48E of the Internal Revenue Code. These provisions provide additional rewards for projects that meet prevailing wage and, in some instances, apprenticeship requirements. They offer substantial financial benefits for energy-efficient construction, multifamily residential development, and renewable energy installations....
The §179D tax deduction for energy-efficient commercial buildings will no longer apply to construction projects after June 30, 2026. To qualify for the §179D deduction, construction must begin before June 30, 2026, as mandated by the One Big Beautiful Bill Act of 2025. The current deduction amount for buildings placed in service in 2025 is set at $5.81 per square foot when the project meets or is exempt from prevailing wage and apprenticeship (PWA) requirements. Deduction amounts will continue to increase annually based on inflation adjustments through June 30, 2026. The deduction may still be immediately claimed in the year the property is placed in service....
The IRS has updated its Practice Unit on the §179D Energy Efficient Commercial Buildings Deduction. While not official guidance, these units provide valuable insights into IRS audit and enforcement approaches. The latest §179D updates introduce new eligibility rules, compliance requirements, and higher deduction limits. Given the complexity of these provisions, non-compliance can increase audit risks. Engaging qualified tax professionals and engineers is crucial to ensuring compliance and maximizing deductions....
In a 2024 case, United States of America v. Oehler et al, the tax court denied the Energy Efficient Commercial Building Deduction under IRC §179D to a lighting contractor for work they performed upon public schools since it failed to meet the definition of a “designer”....
The IRS released final regulations and related guidance regarding bonus credits and deductions for taxpayers that satisfy prevailing wage and apprenticeship (PWA) requirements. The regulations apply to certain “green” energy tax provisions, such as the §179D Energy Efficient Commercial Building Deduction and the §45L Energy Efficient Home Credit, as well as others like the §48 Energy Investment Credit, which were modified or enacted by the Inflation Reduction Act of 2022....
The IRS recently released Announcement 2024-24, notifying taxpayers that Reference Standard 90.1-2022 is the applicable reference standard required under the §179D Energy Efficient Commercial Building Deduction for ‘Energy Efficient Commercial Building Property’ (EECBP) placed in service after December 31, 2028, and the construction of which did not begin by December 31, 2022....
The §179D Energy Efficient Commercial Building Deduction is a federal tax incentive encouraging energy efficient construction by providing building owners and designers with substantial financial benefits. An exciting aspect in 2024 is the inflationary increase of the maximum §179D Deduction to $5.65 per square foot for projects meeting the prevailing wage and apprenticeship requirements and $1.13 per square foot for those that do not. In 2023, the maximum deduction was $5.36 per square foot and $1.07 per square foot, respectively. In 2022 and prior years, the maximum deduction ranged between $1.80 to $1.88 per square foot....
In a recent case, Michael Johnson, et ux. v. Commissioner, the tax court denied the majority of a taxpayer’s Energy Efficient Commercial Building Deduction under IRC §179D since it claimed a §179D Deduction exceeding the cost of the Energy Efficient Commercial Building Property (EECBP)....
The IRS recently published Form 7205 and the corresponding Instructions for taxpayers claiming the §179D Energy Efficient Commercial Building Deduction. In prior tax years, the §179D Deduction was listed as an Other Deduction, but the new Form 7205 allows qualified business entities and individuals to claim the deduction under section 179D....