IRA Statuatory Location:
Tax Code Location:
26 U.S. Code § 179D
New or Modified Provision:
Modified and extended. Efficiency requirements updated.
Commercial property owners; Building Designers
U.S. Department of Treasury
Provides a tax deduction for energy efficiency improvements tocommercial buildings, such as improvements to interior lighting; heating, cooling, ventilation,and hot water; and building envelope. Owners and long-term lessees of commercial buildings. Designers of energy efficient building property (architects, engineers). Tax-exempt owners of commercial properties, pending Treasury guidance on deduction allocation.
Direct Pay Eligibility:
Energy Community Bonus:
Related ResourcesAdditional information is available on the Resources page.
Period of Availability
Permanent; new rules generally begin in 2023.
Business tax deduction
Base Credit Amount:
$0.50-$1 per square foot, depending on increase in efficiency, with deduction over four year periods capped at $1 per square foot. Inflation adjusted. Alternatively, taxpayers can deduct adjusted basis in qualified retrofit plans that reduce a buildings energy use intensity by at least 25%.
Bonus Credit Amount:
5 times the base amount if the project meets prevailing wage and registered apprenticeship requirements. Initial guidance on the labor provisions is available here. (https://www.federalregister.gov/documents/2022/11/30/2022-26108/prevailing-wage-and-apprenticeship-initial-guidance-under-section-45b6bii-and-other-substantially)