Energy Efficiency That
Pays You Back.
Section 179-D allows commercial building owners and designers to claim significant federal tax deductions for energy-efficient improvements, up to $5.65 per square foot. Existing buildings and prior improvements are fully eligible. New construction must begin by June 30, 2026.
A powerful deduction for
energy-efficient buildings.
Section 179-D of the Internal Revenue Code allows owners and designers of commercial buildings to claim a federal tax deduction for installing energy-efficient systems. Originally capped at $1.88 per square foot, the Inflation Reduction Act dramatically expanded the benefit, now up to $5.65 per square foot for buildings meeting prevailing wage requirements.
The deduction applies to three primary building systems: interior lighting, HVAC & hot water, and building envelope (insulation, windows, doors, and roof). Each system can generate a partial deduction, or a full deduction is available when the whole building meets the energy efficiency standard.
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New construction and renovations both qualify Whether you built new or made improvements, qualifying energy-efficient systems are eligible for the deduction.
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Designers can claim it too Architects, engineers, and contractors who design qualifying systems for government-owned buildings can receive the deduction directly.
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Retroactive claims available Projects completed in prior years that were never claimed can still qualify. We identify and document the opportunity.
Deduction Rate Summary
Three systems that drive
significant deductions.
Section 179-D covers improvements to three primary building systems. Each can generate a partial deduction, or combine all three for the maximum benefit.
Interior Lighting
LED upgrades, lighting controls, occupancy sensors, and daylight-responsive systems that reduce energy consumption compared to ASHRAE standards.
Up to $0.60/sq ft partialHVAC & Hot Water
High-efficiency heating, ventilation, air conditioning, and water heating systems that meet or exceed energy performance thresholds.
Up to $0.60/sq ft partialBuilding Envelope
Insulation, energy-efficient windows and doors, reflective roofing, and other envelope improvements that reduce heating and cooling loads.
Up to $0.60/sq ft partialBuilt for commercial property
owners and designers.
Section 179-D applies to a wide range of commercial buildings, both privately and government-owned. Here are the most common candidates.
Office Buildings
Lighting upgrades and HVAC improvements are among the most common qualifying improvements in office settings.
Schools & Government Buildings
Designers and contractors who work on government-owned buildings can receive the deduction directly, a major benefit for architects and engineers.
Retail & Mixed-Use
Strip centers, shopping malls, and mixed-use properties with recent lighting or HVAC renovations are strong candidates.
Industrial & Warehouse
Large square footage means large deductions. Even modest per-square-foot improvements generate significant total deductions.
Hotels & Hospitality
Energy-efficient HVAC, hot water systems, and lighting throughout guest rooms and common areas frequently qualify.
Healthcare Facilities
Medical offices, hospitals, and outpatient centers with specialized HVAC and lighting systems often meet Section 179-D standards.
How We Identify and Claim Your Deduction
Free Eligibility Assessment
We review your building details and energy systems at no cost and estimate your potential deduction before you commit to anything.
Energy Analysis
We perform a qualified energy analysis using IRS-approved software to model your building's energy performance and document qualifying systems.
Certification & Documentation
We produce the required certification package, signed by a licensed engineer, and deliver it ready for your CPA to file.
Deduction Applied
Your CPA files the deduction. You see the savings on your tax return, current year or retroactively through amended returns.