This tax code allows commercial building owners to claim tax deductions for qualifying upgrades that improve energy efficiency. The deductions must be for one of three systems: HVAC, interior lighting, and/or building envelopes. The contractor must reduce the total annual energy cost by 25%; partial deductions are allowed.
Tenants may be eligible if they make construction expenditures. If the system or building is installed on federal, state, or local government property, the 179D tax deduction may be taken by the person primarily responsible for the system's design. The 179D tax deduction does not apply to other non-tax-paying entities, including but not limited to NGOs or churches, unless there is an Energy as a Service (EAAS) agreement that is owned by a tax-paying company.