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Energy Saving Tax Incentives

2/2 | White Papers

“EPAct is another way of raising the bar when it comes to energy-efficient design. Similar to LEED, it will push the industry to provide more efficient light fixtures and HVAC systems. TowerPinkster strives to stay ahead of the curve in sustainable design, and in the case of EPAct, our clients can reap the financial rewards."

Lentz Becraft, PE, LEED AP

Electrical Engineer


Federal Tax Incentives

The EPA’s Energy Policy Act of 2005 created tax incentives to improve building energy efficiency across the U.S. The “Commercial Building Tax Deduction” establishes a federal deduction equal to the energy-efficient expenditures made by commercial property owners, subject to a cap. The deduction can be claimed directly by the owners or, in the case of Federal, State, and local government facilities or public schools, by the project designer.

How Does it Work?
A deduction of up to $1.80/SF is available to owners or designers of new or renovated buildings that save at least 50% of the lighting, heating, and cooling energy of a building that meets ASHRAE Standard 90.1-2001. Partial deductions of up to $.60/SF can be taken for measures aff ecting any one of three building systems: the building envelope, lighting, or heating and cooling systems The partial deduction for energy-efficient lighting is the easiest to claim and to document, as no computer simulation is required. HVAC deductions can also be readily achieved, although energy modelling is required to verify efficiency. Unfortunately, the requirements for an energy-efficient building envelope can be costly and difficult to meet. As a result, only a small percentage of buildings will receive the full $1.80/SF deduction. Certifications and documentation of expenditures and energy savings must be obtained after project completion and prior to tax submittal.