Posted by Jeffrey Feingold on 08.03.17
When the Protecting American from Tax Hikes (PATH) Act of 2015 was enacted by Congress, it made the research and development (R&D) tax credit permanent, as well as a number of other expiring tax provisions. However, other tax incentive and credit programs were left to face an uncertain future, including the popular energy tax deduction, known as the 179D Tax Deduction. This valuable tax deduction was extended by Congress through 2016.
In 2005, Congress passed the Energy Policy Act. The law created a tax incentive tied to the design or installation of energy-efficient interior lighting, HVAC, hot water or building envelope systems in commercial buildings. Section 179D of the Internal Revenue Code still allows qualifying businesses to deduct up to $1.80 per square foot for eligible projects placed into service between 2006 and 2016.
Commercial building owners can take a federal tax deduction of up to $1.80 per square foot of the building’s floor area if they install certain property (e.g., efficient lights or HVAC systems, added wall or roof insulation, etc.) that reduces energy and power costs. The 179D deduction is allowed for both new construction and renovations completed between 2006 through 2016.
As the nation waits to see what the future holds for tax reform, legislation has been introduced to protect the energy tax deduction by making it permanent. Congressmen Dave Reichert (R-WA) and Earl Blumenauer (D-OR) have joined in a bipartisan effort by introducing new legislation to permanently extend and modify the 179D deduction. While legislation has been introduced in the past to extend the deduction beyond 2016, this is the first to receive bipartisan support. Further, the proposed legislation would allow nonprofit organizations to allocate the 179D deduction in addition to the public agencies who are currently able to allocate the deduction.
Tax Point Advisors applies our national expertise to your local projects by being more hands-on and cost-effective than many of our competitors. Our team of licensed professional engineers makes it easy for you. They have helped hundreds of companies successfully claim 179D energy tax benefits. On top of that, our accounting experts support your application and provide professional guidance throughout the process.
Tax Point Advisors provides R&D tax credit study services and other specialty tax services to CPA firms and their clients throughout the U.S. To learn more about the 179D tax deduction from the experts at Tax Point Advisors, contact us at (800) 260-4138, or please leave us a message below.