U.S. Department of Energy - Energy Efficiency and Renewable Energy
EERE Financial Opportunities
IRS Issues Guidance on Commercial Building Tax Deduction
June 7, 2006
The U.S. Internal Revenue Service (IRS) issued on June 2nd an advance
copy of a notice on how commercial building owners or leaseholders can
qualify for a federal tax deduction by making their buildings more
energy efficient. The commercial building deduction, which was enacted
in the Energy Policy Act of 2005, allows taxpayers to deduct the cost
of energy-efficient property installed in commercial buildings. The
amount deductible may be as much as $1.80 per square foot of building
floor area for buildings that cut their energy use by half. Buildings
that fall below that target can still earn a deduction of 60 cents per
square foot if they at least cut their energy use by one sixth.
Before claiming the deduction, the taxpayer must obtain a
certification that the required energy savings will be achieved, and
the notice describes how to obtain that certification. To support this
effort, DOE will create and maintain a public list of software that
must be used to calculate energy savings for purposes of providing the
certification. See the
IRS press release
and the full notice (PDF 99 KB).
Download Adobe Reader.
For more information on tax incentives, see
project of the Tax Incentives Assistance Project, as well as
the Web site of the Commercial Building Tax Deduction Coalition.
In addition, the National Lighting Bureau (NLB) has created a
brochure (PDF 903 KB) about how the tax incentives encourage high-efficiency indoor lighting.