Created by the Energy Policy Act of 2005, the Commercial Buildings Tax Deduction (Section 179D of the tax code) provides an accelerated tax deduction of up to $1.80/sq.ft. as an incentive to install energy-efficient building systems, including interior lighting. The tax deduction expired and renewed several times over the years, most recently with the passage of the 2015 PATH Act, which retroactively extended the CBTD from December 31, 2014 to December 31, 2016. PATH made it more difficult to qualify for the tax deduction by raising the energy efficiency baseline from the 2001 to the 2007 version of the ASHRAE/IES 90.1 energy standard.
The CBTD expired at the end of 2016 but was recently extended to the end of 2017. On February 9, President Trump signed the Bipartisan Budget Act of 2018 into law, which contained a number of provisions including the CBTD extension.
The Budget Act reads:
SEC. 40413. Extension of energy efficient commercial buildings deduction.
(a) In general.—Section 179D(h) is amended by striking “December 31, 2016” and inserting “December 31, 2017”.
(b) Effective date.—The amendment made by this section shall apply to property placed in service after December 31, 2016.
What this means: Lighting upgrade projects completed in 2017 may qualify for the CBTD. Click here to learn more.
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