Are You Going to Lose Valuable 179D Tax Deductions?

April 3, 2026

Don’t leave money on the table. Start a qualifying energy project before June 30, 2026

Section 179D is a federal tax deduction for eligible owners who produce energy-efficient designs and upgrades in commercial and specific large residential buildings. Those owners will be able to deduct a portion of the project costs that are tied to energy performance instead of having to capitalize them over time.

What are the advantages of acting before the 179D deadline?

If you start your energy-efficiency project before the June 30, 2026 deadline, you can:

Reduce your upfront net cost through substantial tax deductions
Improve your projects' ROI and accelerate payback periods on efficiency investments
Offset capital budgets for deferred maintenance and modernization
Lock in benefits under current rules before they change or expire

The tax deduction is calculated on a per-square foot basis, so larger facilities can generate particularly meaningful tax savings if they meet the highest efficiency tiers and labor requirements.

Eligible building type include:

Office buildings
Warehouses
Industrial facilities
Retail spaces
Mixed-use properties
Hospitals, healthcare facilities and laboratories

In order to qualify, your building must meet energy-performance standards compared to a reference baseline established in federal guidelines.

Qualifying upgrades include:

Interior lighting systems—advanced lighting retrofits that improve visibility, efficiency and long-term operational savings
HVAC and hot water systems—high-performance heating, cooling and ventilation systems, and water heating upgrades that lower energy consumption and improve system reliability

Projects may qualify as whole-building upgrades or through recognized partial systems if they meet the required efficiency thresholds and documentation standards.

The improvements eligible for tax deductions include:

Interior lighting systems—advanced lighting retrofits that improve visibility, efficiency and long-term operational savings
HVAC and hot water systems—high-performance heating, cooling and ventilation systems, and water heating upgrades that lower energy consumption and improve system reliability

Projects may qualify as whole-building upgrades or through recognized partial systems if they meet the required efficiency thresholds and documentation standards.

Why leave money on the table?

EMC takes a lifecycle approach to support the unique needs of your customer operations, maximizing the efficiency, effectiveness and lifespan of their investment. We’re here to provide you with energy management solutions that help you reach your sustainability goals while achieving ROI objectives.