179D Green Energy Incentive

EPAct 179D Energy Efficiency, Save Taxes

H.R. 1892, the “Bipartisan Budget Act of 2018.”

On February 9, Congress passed, and the President signed into law, H.R. 1892, the “Bipartisan Budget Act of 2018” (the Budget Act, P.L. 115-123). In addition to providing a continuing resolution to fund the federal government through March 23, this 2-year budget contains a host of tax law changes. The Budget Act retroactively extends through 2017 over 30 so-called “extender” provisions, provides a number of miscellaneous tax-related provisions, and includes the Code Section 179D deduction.

Energy Efficient Commercial Building Deduction Extended Through 2017

Under Code Sec. 179D, a deduction was allowed in an amount equal to the cost of “energy efficient commercial building property” (i.e., energy efficient improvements to lighting, heating, cooling, ventilation, and hot water systems of commercial buildings) placed in service during the tax year. The maximum deduction for any building for any tax year was the excess (if any) of the product of $1.80, and the square footage of the building, over the aggregate amount of the deduction under Code Sec. 179D for the building for all earlier tax years.

Under pre-Budget Act law, this deduction didn't apply to property placed in service after Dec. 31, 2016.

New law. The Budget Act extends the deduction for one year, so that it applies to property placed in service before Jan. 1, 2018. (Code Sec. 179D(h), as amended by Budget Act Sec. 40413)