Internal Revenue Code Section 179D (Code Section 179D) provides a tax incentive to those who build or renovate energy-efficient buildings. The tax deduction is triggered if building design improvements in heating, lighting, HVAC, hot water, or the building envelope (roof, walls, windows) result in efficiency of at least 25 percent. Starting in 2023, nonprofits can also benefit from Code Section 179D.
The qualified deduction for projects meeting prevailing wage and apprenticeship standards will range between $2.50 and $5 per square foot, depending on the building’s energy-efficiency level.