A Basic Guide to the 179D Tax Incentive

Section179D Tax Incentive?

The section 179D tax incentive is meant to provide a way for businesses and organizations to reduce their overall tax liability. This is done by providing an income tax deduction of up to $1.80 per square foot for certain energy efficient projects. Understanding this incentive can help you make informed decisions about your business’s energy efficiency investments. Let’s take a closer look at the benefits of the 179D Tax Incentive.

What Is the Section 179D Tax Incentive??

The Section 179D Tax Incentive allows businesses and organizations to deduct up to $1.80 per square foot of their energy efficient improvements on commercial buildings that are placed in service between 2006 and 2023. This incentive applies to both new construction and retrofitting projects, so long as they meet certain qualifications set out by the IRS. It’s important to note that this deduction is only available if you are the owner of the building or qualify as a tenant under certain circumstances.

Requirements For Qualifying Projects?

In order for a project to qualify for this incentive, it must meet certain criteria outlined by the IRS including:

? The project must be an improvement or repair that was made after December 31, 2005, and put in service between January 1, 2006 and December 31, 2023;

? The project must improve the building envelope (including windows, doors, walls) or systems (such as lighting and HVAC);

? The improvement must result in energy savings of at least 50% compared to similar buildings built before 2006; and

? You must have obtained an Energy Star certification from an independent third party certifier prior to filing your return with Form 8911 attached.

Benefits of Taking Advantage of this Deduction?

Taking advantage of these deductions can be extremely beneficial for businesses since it will reduce their taxable income by up to $1.80 per square foot depending on how much energy they save compared to similar buildings built before 2006. Additionally, taking advantage of these deductions can help businesses lower their monthly energy bills due to increased efficiency resulting from improved insulation or updated HVAC systems. Thus allowing them more funds for other areas in their business such as marketing or employee benefits programs.?

Conclusion:?

Understanding how the Section 179D Tax Incentive works can help businesses reduce their overall tax liability while simultaneously improving their business operations through increased efficiency resulting from improved insulation or updated HVAC systems. This incentive allows businesses and organizations to deduct up to $1.80 per square foot on qualifying energy efficient projects placed into service between 2006 and 2023 which can provide significant financial benefits over time with minimal effort required on behalf of business owners or accounting professionals alike. With all these benefits combined, it’s easy to see why taking advantage of this incentive should be considered when making decisions about energy efficiency investments moving forward!