The 179D incentive is a federal tax deduction available to Architects, Engineers, and Contractors for their work on newly constructed and renovated government buildings. Commercial property owners are also able to claim this valuable tax incentive. Designers and builders of K-12 schools, city and county buildings, state universities, and federal and military buildings are taking advantage of this lucrative tax incentive for energy-efficient HVAC, lighting, and building envelope scope of work.
For buildings finished in 2023, the deduction rate increases up to $5.00 per square foot and extends to buildings owned by certain tax-exempt entities; tribal properties, places of worship, and non-profit organizations such as universities and hospitals are all eligible for the incentive. For buildings completed before 2023, the incentive is $1.80 per square foot.
The 2022 Inflation Reduction Act (IRA) was signed into law and provides new tax incentive opportunities for architects, engineers, contractors, and commercial property owners. The IRA increased the 179D Tax Deduction for commercial buildings placed in service in 2023 and beyond to as much as $5.00 per square foot for exceeding certain energy efficiency standards.
ARCHITECTS | ENGINEERS | CONTRACTORS | REITs
|179D Provisions||Through2022||After 2022|
|Max Tax Deduction||$1.80/SF||$2.50/SF to $5.00/SF sliding Scale|
|Energy Efficiency Requirements||50% better than ASHRAE 90.1 standard||25 to 50% better than ASHRAE 90.1 Standard
|Entities That Can Allocate||Government Agencies||Government Agencies Tax Exempt Entities Indian Tribal Governments Alaska Native Corps|
*Drops to $0.50/SF - $1.00/SF if the taxpayer fails to meet certain prevailing wage and apprenticeship requirements
AND construction commenced after January 30th, 2023.*
Additional Allocations for Designers/Builders
Real Estate Investment Trusts – REITs are now able to immediately deduct 179D Deductions!
Retrofit Projects – Building retrofits that improve on existing energy use intensity now eligible!
BRAYN’s team of engineers, attorneys, and tax professionals can advise on the changing requirements, secure allocations on your behalf, and certify your projects for the 179D Tax Deduction.
¤ BRAYN Consulting LLC is a niche consulting firm empowering businesses with specialty tax incentives. Our team of experts collaborates with your CPA firm to maximize your tax benefits. Together, we drive your business prosperity.
⇒ Contact us to explore the opportunities and drive your business forward.