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What is the 179D Tax Deduction?

Section 179D is a deduction that allows building owners to claim up to a $1.80 per square feet for energy-efficient buildings or installing systems to that effect. To qualify, newly constructed or renovated buildings must meet or exceed some key energy reduction requirements and ASHRAE standards. Section 179D is meant to stimulate the economy by rewarding architecture, engineering, and contracting businesses for their work on government-owned buildings.

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What are the Benefits of the 179D Tax Deduction?

You can claim up to $1.80 per square foot of the building worked on. For example, if the qualified building is $100,000 square feet, that could mean up to a $180,000 tax deduction for the work completed.

Who Can Claim It?

Architects, engineers, and contractors that work on new or renovated government-owned buildings and structures, for example:

K-12 Schools
Military Bases
Prisons
Courthouses
Universities
Libraries
City Parks
Airport
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A Guide on How You Can Claim the 179D Deduction

The Consolidated Appropriations Act of 2021 made the Section 179D Energy Efficient Building Deduction permanent and gives business owners and government contractors a tax incentive for energy-efficient improvements to commercial and government buildings.

What Improvements are Eligible for this Tax Deduction?

Taxpayers who invest in constructing new buildings or improving their existing buildings are eligible for 179D deduction. These investments must be aimed at reducing energy use. The improvements eligible under ASHRAE standards include:

  • Building envelope improvements
  • HVAC improvements
  • Interior lighting solutions

Maximize Your 179D Deduction: Check If You Qualify

We’ll help determine your eligibility, document your processes, and maximize your return for no upfront fees! Complete the form below to estimate your refund.

erc credit eligibility check

Here Are Some of Our Clients' Success Stories:

The following are examples from a range of industries:

Total Deduction:

$13 MM

Project Types Include: K-12 Schools, City Housing, Higher Education, Libraries, Police Stations

Total Deduction:

$6 MM

Project Types Include: Nursing Schools, Higher Education, K-12 Schools, Hospitals, College Dormitories

Total Deduction:

$2.8 MM

Project Types Include: Fire Stations, Police Stations, K-12 Schools

The 179D Study Process

To qualify for the 179D tax deduction, one needs to follow due process. Broadly there are two parts to the 179D study process.

  • Evaluation: In this part, you evaluate the building to determine if they qualify for 179D tax deduction. The building is also compared to the reference model for energy efficient qualifications under ASHRAE norms. This also involves a physical visit to the building by a licensed qualified third party in the state.
  • Documentation: There are two primary documents required for 179D tax deduction. Allocation letters confirming ownership of property, energy efficiency of the building and signed by authorized personnel are required for 179D tax deduction. Secondly, a report certifying the building qualifies for 179D along with an energy model that shows energy reduction compared to ASHRAE standards.

1. DISCOVERY & ASSESSMENT

Project List – Identify Buildings Secure Allocation Letter(s) Obtain Documentation

2. QUALITATIVE & QUANTITATIVE ANALYSIS

Energy Modeling, Field Inspection, Certification, and Deliver Final Deduction Numbers for Filing

3. REPORTING

Document Cataloguing, Summary Drafting, and Final Report

How Can We Help? The alliantgroup Advantage

  • Risk-free, no-cost preliminary assessment
  • Top-class staff of licensed engineers in every state who give utmost attention to every aspect of the whole process
  • State-of-the-art cutting-edge proprietary software interface that aligns with the US Department energy modeling software used by the IRS
  • Best licensed engineers in all 50 states
  • A highly skilled team of energy modelers who specialize in the three qualifying building systems
  • Well-established relationships with 8000+ government entities

alliantgroup has delivered over $3 billion in 179D tax deduction. Our track record is as follows:

  • Nearly $13.3M deduction identified for 51 properties in architecture and engineering
  • Close to $12.8M deduction for a mechanical contractor in controls, HVAC, and sheet fabrication
  • Total $2.6M deductions for general contractors in interior lighting and HVAC
Testimonials

Hear From Our Clients

Our specialty consulting team did an excellent job leading our study and made it as painless and simple for us as possible. It was not too time insensitive, and the benefits were well worth our while”

MEP Engineering Firm, AR.

We are very appreciative of the worthwhile tax savings alliantgroup helped secure for our company. They’re currently being reinvested into the business as a beneficial cash injection towards our growth goals.”

Architecture & Engineering Firm, ME.

FAQ’s – Frequently Asked Questions

Single-family homes, private family buildings with three or fewer stories, and manufactured properties do not qualify for the 179D tax deduction. Religious buildings and similar organizations’ buildings do not qualify because they are tax exempt.

epFace works with EnergyPlus, the U.S. Department of Energy’s open-source energy modeling software that is used by the IRS to calculate 179D tax deductions.

A tax deduction can be taken for a project started in 2018. The deduction has been made permanent, so all current and future projects are eligible for the tax deduction.

No, this tax deduction is only applicable to building owners who pay taxes. The exception is for designers who work on government-owned buildings.

No, this tax deduction is only applicable to building owners who pay taxes. The exception is for designers who work on government-owned buildings.

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We’ll discuss your eligibility and help estimate your potential tax benefit.