The Protecting Americans from Tax Hikes Act of 2015 (“PATH” or “Act”), which was signed into law by President Obama on December 18, 2015, featured a number of tax provisions, including an extension of the Commercial Energy-Efficient Buildings Tax Deduction (Section 179D) by two years from December 31, 2014 to December 31, 2016.

The text from HR2029:

13 SEC. 190. EXTENSION OF ENERGY EFFICIENT COMMERCIAL
14 BUILDINGS DEDUCTION.
15 (a) IN GENERAL.—Section 179D(h) is amended by
16 striking ‘‘December 31, 2014’’ and inserting ‘‘December
17 31, 2016’’.
18 (b) EFFECTIVE DATE.—The amendment made by
19 subsection (a) shall apply to property placed in service
20 after December 31, 2014.

Section 179D offers an accelerated tax deduction on energy-efficient property, including lighting, placed in service on or before December 31, 2016. It may now be applied to projects completed in 2016 and also retroactively to projects completed in 2015.

The new law also raises the bar for energy efficiency by replacing the existing baseline of ASHRAE/IES Standard 90.1-2001 to ASHRAE/IES 90.1-2007. This will make it more difficult to qualify for the tax deduction for projects completed in 2016.

The text from HR2029:

7 SEC. 341. UPDATED ASHRAE STANDARDS FOR ENERGY EF8
FICIENT COMMERCIAL BUILDINGS DEDUC9
TION.
10 (a) IN GENERAL.—Paragraph (1) of section 179D(c)
11 is amended by striking ‘‘Standard 90.1–2001’’ each place
12 it appears and inserting ‘‘Standard 90.1–2007’’.
13 (b) CONFORMING AMENDMENTS.—
14 (1) Paragraph (2) of section 179D(c) is amend15
ed to read as follows:
16 ‘‘(2) STANDARD 90.1–2007.—The term ‘Stand17
ard 90.1–2007’ means Standard 90.1–2007 of the
18 American Society of Heating, Refrigerating, and Air
19 Conditioning Engineers and the Illuminating Engi20
neering Society of North America (as in effect on
21 the day before the date of the adoption of Standard
22 90.1–2010 of such Societies).’’.
23 (2) Subsection (f) of section 179D is amended
24 by striking ‘‘Standard 90.1–2001’’ each place it ap-
1 pears in paragraphs (1) and (2)(C)(i) and inserting
2 ‘‘Standard 90.1–2007’’.
3 (3) Paragraph (1) of section 179D(f) is amend4
ed—
5 (A) by striking ‘‘Table 9.3.1.1’’ and insert6
ing ‘‘Table 9.5.1’’, and
7 (B) by striking ‘‘Table 9.3.1.2’’ and insert8
ing ‘‘Table 9.6.1’’.
9 (c) EFFECTIVE DATE.—The amendments made by
10 this subsection shall apply to property placed in service
11 after December 31, 2015.

Overall, this is good news for the lighting industry, which can leverage the accelerated tax deduction incentive to promote energy-efficient lighting in new and existing construction.

Craig DiLouie

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