Upgrade Now: 179D Tax Deduction Program Extended through 2020

179D tax deduction program for commercial building energy-efficiency upgrades

Are bottom-line concerns holding you back from making energy efficiency upgrades to your facility? Knowing and understanding all of the available federal and local incentives for sustainable upgrades is a crucial factor in that decision-making process. One such incentive, the 179D tax deduction program, has now been extended through 2020.

What Is the 179D Deduction?

The Energy Policy Act, signed into law in 2005, was originally aimed to curb energy usage and address energy independence concerns. It was later amended and given the name, the Energy Policy Modernization Act of 2015. The legislation promotes sustainability, encouraging energy efficiency upgrades for new and existing buildings and includes a tax deduction, known as the Energy-Efficient Commercial Buildings Tax Deduction or “179D”.

In December 2019, Congress passed a budget agreement that included a number of tax energy extenders, including 179D, through December 31, 2020. This enables building owners and businesses to claim a tax deduction of up to $1.80 per square foot for qualifying upgrades to HVAC, lighting systems and building envelope: up to $0.60 per square foot for HVAC systems; up to $0.60 per square foot for lighting systems; and up to $0.60 per square foot for building envelope.

179D can be applied towards improvements made in many commercial building types, including:

  • Retail
  • Industrial
  • Hospitality
  • Residential buildings with 4 or more floors

How Much Can You Deduct?

Our chart breaks it down for you.

Summary of Savings & Tax Deductions

Fully Qualifying Property Partially Qualifying Property
Envelope HVAC and Solar Hot Water Lighting Interim Lighting Rule
Savings Requirements 50% energy and power cost savings 10% energy and power cost savings 15% energy and power cost savings 25% energy and power cost savings 25%–40% lower LPD (50% for warehouses)
Tax Deduction Cost of qualifying property up to $1.80/ft2 Cost of qualifying property up to $0.60/ft2 Cost of qualifying property up to $0.60/ft2 Cost of qualifying property up to $0.60/ft2 Cost of qualifying property up to $0.60/ft2 times applicable percentage

Dalkia can assist you in determining your 179D eligibility, and maximize your deduction by helping you complete the required certifications before the program’s expiration. Varying maximum and partial deductions can be claimed based upon your project scope.

We have a long track record of helping customers take advantage of federal and local incentives, and delivering both energy efficiency and cost savings to customers. Contact us today to get started!