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Maximize Your Benefits: How the IRA Improves Section 179D Deductions for Energy Efficiency

ARTICLE | October 08, 2024

Authored by Vasquez + Company


The Inflation Reduction Act (IRA) has significantly enhanced the Section 179D deduction for energy-efficient commercial building improvements, effective for projects placed in service after 2022. This article explores the enhancements, which include nearly tripling the maximum deduction to $5.36 per square foot and expanding eligibility to real estate investment trusts (REITs) and designers for nonprofit organizations.

Key Points:

  • Enhanced Deduction: The maximum deduction has increased from $1.88 to $5.36 per square foot, depending on energy savings.
  • Expanded Eligibility: Eligibility now includes REITs and designers working for nonprofit entities.
  • Reduced Requirements: The energy savings threshold has been lowered from 50% to 25%, making it easier for improvements to qualify.
  • Bonus Deductions: Projects meeting certain wage and apprenticeship requirements can access additional deductions.
  • Claiming Deductions: There are options available for retroactive claims on previous improvements.

This enhancement allows businesses to invest in energy efficiency while reaping significant tax benefits. For more details, read the full article here.

 


Our firm provides the information for general guidance only, and does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation. This article is not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding accuracy-related penalties that may be imposed on the taxpayer. The information is provided “as is,” with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose.

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