Slices of three different pieces of paper: the image of Ben Franklin on a $100 bill, a U.S. Treasury note, and an IRS 1040 tax form.

Local school districts can take advantage of the 179D Commercial Buildings Energy-Efficiency Tax Deduction to reduce the costs of qualifying improvements or construction when the tax deduction is taken by the person primarily responsible for the system’s design. The 179D tax deduction has been in effect since January 1, 2006, and is now a permanent program enacted as part of the Consolidated Appropriations Act of 2021 signed into law on December 27, 2020.

The following information is still applicable for properties placed into service on or before December 31, 2020. Updated information will be made available for properties placed into service on or after January 1, 2021 upon anticipated IRS Notice release.

A tax deduction of $1.80 per square foot is available to owners of new or existing buildings who install (1) interior lighting; (2) building envelope, or (3) heating, cooling, ventilation, or hot water systems that reduce the energy and power cost of the interior lighting, HVAC, and SHW systems by 50% or more in comparison to a building meeting minimum requirements set by ASHRAE Standard 90.1. Cost savings must be calculated using qualified computer software.

Deductions up to $0.60 per square foot are available to owners of buildings in which individual lighting, building envelope, or heating and cooling systems partially qualify by meeting certain target levels or through the interim lighting rule.