Energy Efficiency Incentives

May 14, 2025 The End of Energy Star and the §45L Tax Credit? Proposed Legislation Threatens Key Programs

The §45L Tax Credit and EnergyStar are currently intertwined. Losing one jeopardizes the other, significantly impacting our ability to build energy-efficient homes. The §45L credit is crucial for our industry's financial viability and environmental progress. Losing EnergyStar would severely hinder our ability to build sustainable housing. The §45L Tax Credit is our country’s last remaining federal incentive for residential builders....

Mar 31, 2025 Navigating the Complexities of IRC §179D: Why Expert Guidance is Essential

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....

Oct 2, 2024 Tax Court Case: Lighting Contractor Failed to Meet Definition of “Designer”, Denied §179D Energy Efficient Commercial Building Property Deduction

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”....

Jun 21, 2024 IRS Released Final Regulations for Satisfying Prevailing Wage and Apprenticeship Requirements for Green Tax Incentives

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....

May 23, 2024 §179D Energy Efficient Commercial Building Deduction Future Reference Standards

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....

Feb 15, 2024 Maximum §179D Deduction Increased to $5.65 for 2024

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....

Sep 28, 2023 IRS Provides New Guidance on the §45L Energy Efficient Homes Credit via Notice 2023-65

On September 27, 2023, the IRS released guidance on §45L New Energy Efficient Home Credit (§45L Credit) through Notice 2023-65. The guidance provided in this notice addresses: (i) the person that is eligible for the credit, (ii) determining the applicable amount of the credit, (iii) energy saving requirements, (iv) certification requirements, and (v) substantiation requirements....

Mar 15, 2023 Tax Court Case: Engineering Firm Overstated §179D Energy Efficient Commercial Building Property Deduction

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)....

Mar 6, 2023 New IRS Form 7205 for the §179D Energy Efficient Commercial Building Deduction

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....

Jan 9, 2023 IRS Clarifies the Applicable ASHRAE Reference Standards for the §179D Energy Efficient Commercial Building Deduction

The §179D Deduction requires energy modeling whereby the building is compared to the same building constructed to the minimum requirements of a specified ASHRAE 90.1 Reference Standard. In Announcement 2023-1, the IRS affirmed ASHRAE 90.1-2019 as the new Reference Standard. The new standard will be applicable for any projects placed in service after 2026. The IRS also clarified that ASHRAE 90.1-2007 will remain the Reference Standard for any projects placed in service before the newer standard goes into effect. In addition, taxpayers who began construction before 2023 may utilize Reference Standard 90.1-2007 regardless of when the building is placed in service....