Certification for §179D Tax Deduction
Unlock Major Tax Savings with the 179D Deduction
Section 179D of the federal tax code offers a powerful incentive for improving energy efficiency in commercial and certain tax-exempt buildings. For projects completed in 2025, eligible building owners and primary designers may qualify for a federal tax deduction of up to $5.81 per square foot—a significant increase made possible by the Inflation Reduction Act of 2022.
Who Qualifies for the 179D Deduction?
This incentive is available to the following taxpayers:
- Commercial building ownerswho install qualifying energy-efficiency measures, such as lighting, HVAC, or improvements to the building envelope.
- Designers—including architects, engineers, contractors, and green building consultants—who contribute to energy-saving systems in buildings owned by government or nonprofit entities (such as schools, hospitals, and tribal governments).
How Does the 179D Deduction Work?
The deduction follows a sliding scale based on the level of energy savings achieved—and whether the project meets federal prevailing wage and apprenticeship requirements:
- Base deduction: Starts at $0.58 per square footfor energy savings of at least 25%, increasing incrementally up to $1.16 per square foot for energy savings of 50% or more.
- Enhanced deduction: If prevailing wage and apprenticeship standards are met, the deduction jumps to $2.90 per square foot,with the potential to reach $5.81 per square foot for projects achieving 50%+ energy savings.
These enhancements make §179D more valuable than ever—especially for larger projects or those involving tax-exempt properties.
How to Claim the 179D Deduction
When performing a no-cost benefit analysis for the §179D deduction, CRG requests information such as the following:
- Name of legal owner
- Project name and address
- Energy systems to be studied (lighting, HVAC, envelope, or whole building)
- Building usage
- Total square footage of space of the energy efficiencies
- Project start date
- Placed in service date
- Energy Efficiency Property (EEP) cost
Benefit Illustration for Building Owner
Based on the energy efficiency attained and application of the Inflation Reduction Act (IRA), an office building owner was allowed to claim a §179D deduction amounting to $5.65 per s/f—totaling $1,722,074.80 with no need to amend tax returns.
Benefit Illustration for Architect
Based on the square footage of a school building’s energy-efficient design, an architecture firm received a §179D deduction of $1,354,350.20.
Why Work with Capital Review Group?
Claiming the §179D deduction requires third-party certification—and that’s where CRG comes in. With a unique combination of expertise in engineering and tax law, our team can simplify the process of qualifying for the deduction and maximizing your financial benefit.
Whether you’re a building owner or a designer working with tax-exempt clients, don’t leave valuable tax savings on the table. Capital Review Group is here to guide you through the §179D certification process—contact us today to schedule a consultation and find out how much your project could be worth!