Up to $5.94 per square foot for building it efficiently.
Section 179D rewards energy-efficient commercial buildings with a federal deduction based on square footage. Building owners can claim it directly — and architects, engineers, and design-build contractors can be allocated the deduction for work they did on government and tax-exempt projects, even though they never owned the building.
Schedule a call →A deduction measured in square feet.
The 179D deduction applies to commercial buildings that meet energy efficiency standards through their interior lighting, HVAC and hot water systems, or building envelope. The benefit scales with how much the building outperforms the reference standard, and reaches up to $5.94 per square foot when prevailing wage and apprenticeship requirements are met. On a large building, that is not a rounding error — it is a six- or seven-figure deduction.
The part most firms miss is the allocation rule. When the building belongs to a government entity or a tax-exempt organization, the owner has no tax liability and no use for a deduction — so it can be allocated instead to the designer primarily responsible for the energy systems. That means the architecture firm, engineering firm, or design-build contractor on a school, municipal building, university, or hospital project can claim a deduction on a building they never owned.
Worth a look if you design, build, or own commercial buildings.
- Architects who design public or tax-exempt buildings
- Engineering firms responsible for lighting, HVAC, or envelope systems
- Design-build and general contractors
- Owners of commercial buildings over 50,000 sq ft
- Developers who have built or retrofitted recently
- Anyone who has completed an energy retrofit or lighting upgrade
Designers should look back as well as forward. Allocations can generally be pursued for open prior tax years, which means a firm with several years of public-sector project history may have a substantial deduction sitting unclaimed — provided the allocation letters can still be obtained from the building owners.
Efficiency you already delivered, paid for twice.
Scales with square footage
The deduction is priced per square foot, so large projects produce large deductions. One school or municipal building can move the needle materially.
Designers can claim it
Architects, engineers, and design-build contractors can be allocated the deduction on government and tax-exempt projects — without owning the building.
Prior years are in play
Open tax years can typically still be pursued, which often makes the first engagement far larger than the annual run-rate.
We bring it to the table and manage it end to end.
Assess
We review your buildings or project history and confirm there is a deduction worth chasing before you spend anything.
Model
A qualified engineer runs the energy modeling and site verification the statute requires to certify the building.
Allocate
For public and tax-exempt projects, we pursue the allocation letter from the building owner that assigns the deduction to you.
Claim
The certified deduction is applied to your return and coordinated with your CPA.
Certified, or it isn’t a deduction.
179D is not a self-assessed number. The statute requires energy modeling using approved software and physical inspection by a qualified individual, and for designer claims, a signed allocation letter from the building owner. Skip any of that and the deduction does not survive examination. That is why the modeling and certification are done by qualified engineers and the allocation paperwork is handled properly up front. Same standard we bring to everything: optimize aggressively, but never past the line.
Find out what your buildings could be deducting.
A short call is enough to tell whether your projects or properties are likely to qualify and what the deduction could be worth — before you commit to anything.
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