179D Federal Energy Tax Deductions

179D is a popular tax incentive that provides building owners and eligible designers/builders the opportunity to claim a tax deduction of up to $1.80 per square foot for installing qualifying energy efficient systems and buildings.

Who qualifies for the deduction?

  • Building owner at the time of building improvements.
  • Public buildings – the owner may allocate the deduction to the designer (architect, engineer, contractor, environmental consultant or energy services provider) for the tax year that includes the date the property is placed in service.


    What are the requirements?

    • Must reduce total annual energy and power costs with respect to the interior lighting, systems, heating, cooling, ventilation and hot water systems by 50%, but partial deductions are allowed.
    • Energy simulation is required to justify the deduction.
    • Inspection and testing must be completed by a qualified engineer or contractor registered in the jurisdiction.

    What qualifies?

    • Commercial buildings (any size).
    • Apartments, four+ stories, for lease.
    • Commercial energy renovations.

    45L energy efficient home tax credit process: