Section 179D Energy Efficient Commercial Buildings Deduction
Federal tax deduction up to $5/sq ft for installing energy-efficient improvements in commercial buildings, terminating June 30, 2026.
About this program
Section 179D allows building owners and (since IRA) designers of tax-exempt buildings to claim a federal tax deduction for energy-efficient improvements to commercial building envelopes, HVAC, hot water, and interior lighting systems. The deduction is up to $5.81/sq ft (2026 dollars) for projects meeting maximum efficiency and prevailing wage standards. Under the OBBBA, 179D terminates for property beginning construction after June 30, 2026, creating an urgent claim window.
Eligibility
Owners of commercial buildings or designers (architects, engineers, contractors) of energy-efficient improvements installed in commercial or tax-exempt buildings (government, schools, nonprofits) in the U.S.
Requirements
- Begin construction by June 30, 2026
- Engage a qualified third-party 179D engineer to model energy savings
- Demonstrate efficiency improvement (typically 25%+ vs ASHRAE reference)