COMMERCIAL
Commercial Tax Deduction (179D)
Who can use this tax credit?
Owners of new or existing commercial buildings can use this credit
How does the credit work?
Previous Law
Inflation Reduction Act
Scaled tax deduction up to $1.88 per square foot for owners of new or existing buildings who install (1) interior lighting; (2) building envelope improvements; or (3) heating, cooling, or ventilation that reduces power usage up to 50% over ASHRAE 90.1-2019
Scaled tax deduction ranging from $.50 per square foot for 25% efficiency improvements over ASHRAE 90.1-2019 to $1.00 per square foot for 50% improvements
Permanent tax credit
Applies to new property placed in service after December 31, 2022
Scaled tax deduction starting at $2.50 per square foot and increasing to a maximum of $5.00 per square foot for improvements made in compliance with prevailing wage and apprenticeship requirements
Qualified retrofits must be for buildings that are at least 5 years old and must achieve efficiency improvements of at least 25%
Applies to commercial and large multifamily buildings
How long does this credit work?
This tax credit is permanent
How long does this credit work?
This tax credit is permanent
Prevailing Wage Requirements
Section 179D Energy Efficient Commercial Buildings Deduction
(elevated credit amount).
To meet the prevailing wage requirement laborers and mechanics employed by the taxpayer must be paid wages at rates not less than the prevailing rates for construction or alteration of a similar character in the locality where the facility is located as most recently determined by the Secretary of Labor.
Apprenticeship Requirements
Applies to:
Section 179D Energy Efficient Commercial Buildings Deduction (elevated credit amount)
Requirements:
- To meet the apprenticeship requirements taxpayers must ensure that the applicable percentage of the total labor hours (including work performed by any contractor or subcontractor) is performed by qualified apprentices.
- 10% for work beginning before 1/1/2023
- 12.5% for work beginning after 12/31/2022 and before 1/1/2024
- 15% for work beginning after 12/31/2023 12.5%
- The taxpayer or subcontractor who employs 4 or more individuals to perform work for a qualified project must employ 1 or more qualified apprentices to perform such work
- A “qualified apprentice” means an individual who is participating in an apprenticeship program registered under the National Apprenticeship Act
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INSULATION INCENTIVES
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