Created by the Energy Policy Act of 2005, the Commercial Buildings Tax Deduction (Section 179D of the tax code) provides an accelerated tax deduction of up to $1.80/sq.ft. as an incentive to install energy-efficient building systems, including interior lighting. The tax deduction expired and renewed several times over the years, most recently with the passage of the 2015 PATH Act, which retroactively extended the CBTD from December 31, 2014 to December 31, 2016. PATH made it more difficult to qualify for the tax deduction by raising the energy efficiency baseline from the 2001 to the 2007 version of the ASHRAE/IES 90.1 energy standard.
The CBTD is due to expire December 31, 2016. As a popular tax provision, however, it may be renewed again in some form in the future. On November 17, 2016, Rep. Alan Grayson (D-FL) introduced HR 6361, which would extend the CBTD for another two years. He also introduced HR 6360, which would extend it for one year. On November 17, Rep. Dave Reichert (R-WA) introduced HR 6376 [co-sponsored by Rep. Tom Reed (R-NY), Rep. Earl Blumenauer (D-OR), and Rep. Chris Van Hollen (D-MD)], which would modify the CBTD to make small to mid-sized architect firms organized as subchapter S corporations eligible for the deduction. This allows nonprofits the ability to allocate the deduction to designers. Unfortunately, PredictGov gives these bills a 1% chance of being enacted, though an extension and modifications may occur as a component of future omnibus tax legislation.
In the meantime, lighting upgrade projects completed in 2016 may qualify for the CBTD. Click here to learn more.