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Energy Efficient Commercial Buildings Deduction – 26 U.S. Code § 179D

IRA Statuatory Location:


Tax Code Location:

26 U.S. Code § 179D

New or Modified Provision:

Modified and extended. Efficiency requirements updated.

Eligible Recipients:

Commercial property owners; Building Designers

Tribal Eligibility:



Funded by:

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:
No rules
Energy Community Bonus:

Relevant Announcements

Related Resources

Additional information is available on the Resources page.

Key Details

Period of Availability
Permanent; new rules generally begin in 2023.
Tax Mechanism:
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 building’s 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)
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