Exploring the EPAct 179D Energy Efficiency Tax Deduction

The EPAct 179D Tax Deduction is a critical federal initiative aimed at fostering energy efficiency in the commercial building sector. By providing substantial financial incentives, it promotes the adoption of sustainable practices, leading to reduced energy consumption and environmental impact.

This deduction benefits building owners and designers of energy-efficient properties, helping to minimize energy costs and support eco-friendly developments across commercial and tax-exempt entities.

Eligibility Criteria: Who Qualifies?

• ✔ Architects, mechanical engineers, electrical engineers, and other professionals designing tax-exempt buildings
• ✔ Commercial building owners aiming to reduce tax liability through accelerated depreciation
• ✔ Designers of energy-efficient components for government-owned buildings (federal, state, or local)
• ✔ Eligible projects include federal, state, and local government-owned buildings, as well as private non-taxable entities.

Recent Enhancements to the EPAct 179D Program

The Inflation Reduction Act of 2022 introduced transformative changes to the EPAct 179D program. While architects, engineers, and contractors previously qualified for projects involving government buildings, as of 2023, eligibility has expanded to encompass a broader range of tax-exempt entities. This includes projects for charitable organizations, churches, and more.

Additionally, the benefit has increased to up to $5.36 per square foot for buildings implemented in 2023 and $5.65 per square foot for those in 2024, providing even greater incentives for energy-efficient design and construction.