179D: Energy-Efficient Commercial Building Tax Deduction

The Issue

The Energy-Efficient Commercial Buildings Tax Deduction, commonly referred to as 179D, offers building owners a deduction of up to $1.80 per square foot for next-level energy-efficient improvements made to heating, ventilation and air conditioning (HVAC) systems; the building envelope, including windows; and lighting upgrades that exceed ASHRAE Standard 90.1 (currently version 2007) by 50 percent. Buildings must be independently certified to receive this deduction. The tax deduction helps real estate owners who might not otherwise have the necessary capital make the decision to design, retrofit and operate energy-efficient structures. Despite sweeping changes to the tax code in 2017, 179D remains the only federal incentive for commercial buildings to become energy efficient. Since its inception in 2005, 179D has been extended various times, most recently retroactively for 2017. The provision is now expired.

BOMA Position

BOMA urges Congress make 179D a permanent part of the tax code so that building owners can be able to plan for expensive next-level retrofits in a manner that is currently not possible with short-term and retroactive extensions. Advanced energy efficiency retrofits are often more expensive than a building’s return on investment can tolerate. 179D is the only tax provision that incentivizes commercial buildings to be more energy efficient. Lower energy bills translate to more money for tenants to invest back into their businesses.

Specific Ask

Support federal legislative efforts to extend or make permanent the Energy-Efficient Commercial Buildings Tax Deduction (179D).

For more information please contact: John Bryant, Vice President, Advocacy & Codes, BOMA International, 202-326-6323, jbryant@boma.org

BOMA International 179D: Energy-Efficient Commercial Building Tax Deduction One-Pager PDF.

  • Up to 77,000 jobs could be created with a long-term extension of 179D, according to a recent study.*
  • $7.4 billion could be added to the annually GDP with a long-term 179D extension and modification.
  • 179D is a deduction, not a credit.
  • 179D requires major building system upgrades to surpass energy codes by an extra 50% to qualify.