Tax Deductions for Commercial Buildings

UPDATED January 3, 2017
Tax credit expired December 31, 2016

A tax deduction of up to $1.80 per square foot is available to owners or designers of commercial buildings or systems that save at least 50% of the heating and cooling energy as compared to ASHRAE Standard 90.1-2007 (or 90.1-2001 for buildings or systems placed in service before January 1, 2016). The deduction is available for buildings or systems placed in service before December 31, 2016. Partial deductions of up to $.60 per square foot can be taken for measures affecting any one of three building systems: the building envelope, lighting, or heating and cooling systems.

IRS Notice 2006-52 (6/2/2006) provides guidance on the deduction for energy-efficient commercial buildings.

IRS Notice 2008-40 (4/7/2008) - Amplification of Notice 2006-52 sets forth additional guidance relating to the deduction for energy-efficient commercial buildings.

IRS Notice 2012-26 provides savings percentages for a partial tax deduction.

Qualified Software for Calculating Energy Savings Change link to: 

Tax Incentives Assistance Project (TIAP) gives consumers and businesses information they need to make use of federal income tax incentives for energy-efficient products and technologies.

For information on capturing energy-efficiency opportunities for your commercial property, visit www.energystar.gov/buildings.

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