ABGi 179D

Section 179D Deduction


Section 179D Overview



The Section 179D deduction is a powerful specialized incentive for companies in the architectural, engineering, and construction (AEC) space. If you provide services in public sector and are involved in new construction or upgrades to the HVAC, lighting, or building envelope of those commercial buildings, you may qualify for a deduction of up to $1.80 per square foot.


Commercial building owners may also be eligible for this deduction on new construction or major renovations that fall under the same criteria.


ABGi can help your business secure the deductions and meet the technical requirements while providing your business with the proper legal analysis and ethical service that it deserves.


Based on the recent passage of the Inflation Reduction Act (IRA), this deduction is set to increase for any building placed in service after January 1, 2023. More details to follow!

What is the 179D Tax Deduction?


Commercial building owners, architects, engineers, contractors, environmental consultants and energy service providers may qualify for the 179D deduction, which provides a benefit up to 1.80 per square foot for the construction of, or improvements to, commercial buildings with a focus on improved energy usage.

The Energy Policy Act of 2005 included the first iteration of the section 179D deduction to encourage building owners and professionals in the building space to make design and material choices that improved energy efficiency. Section 179D was made permanent in the Consolidated Appropriations Act of 2021. The technical requirements of the deduction center around three primary building systems: HVAC, building envelope, and interior lighting, any one of which alone may qualify for the deduction. New building construction will inevitably incorporate these systems and should be considered. Likewise, improvement to any of the three systems in an existing building often renders enhanced energy efficiency and should be carefully reviewed for qualification.



What is improved energy efficiency?


Improved energy efficiency has a specific meaning under IRS guidance. An independent third party must use approved software to model the energy usage of the building to determine the extent to which it exceeds baseline energy efficiencies. A qualified third party must also certify that the energy savings are accurate. ABGi’s team offers decades experience and expertise in providing the most ethical and legally sound analysis for its clients.



Who can qualify?


Possible qualified taxpayers include:

    • Commercial Building Owners
    • Architects
    • Engineers
    • Contractors
    • Environmental Consultants
    • Energy Service Providers


Because government entities do not pay tax and are therefore not incentivized by tax deductions, Congress recognized that it needed a method to influence energy efficient systems in the construction of local, state, and federally owned buildings. To remedy this inconvenience, it allowed government building owners to allocate what would be an unused deduction to qualified construction professionals. This was a direct effort to encourage and incentivize the entire industry to make buildings more energy efficient.


ABGi  boasts a team of experts with unrivaled expertise in the 179D benefit. Our proprietary turnkey methodology ensures that the technical analysis is legally sound, ethically determined, and is fully backed by audit defense.


Unlike other providers, all work done by ABGi USA is done in the United States within the four walls of our corporate office. We never export data, modeling, or any type of intellectual property to other countries, thus ensuring your work is held in the strictest confidence.