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Section 45L and 179D

As the Inflation Reduction Act breathes new life into energy efficiency incentives, our team of licensed CPAs and tax professionals stands ready to guide you through the possibilities that the 45L tax credit and 179D deduction can bring. These tools can reward investment in sustainable buildings, lowering your tax burden and making green projects more impactful.

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Section 45L and 179D

As the Inflation Reduction Act breathes new life into energy efficiency incentives, our team of licensed CPAs and tax professionals stands ready to guide you through the possibilities that the 45L tax credit and 179D deduction can bring. These tools can reward investment in sustainable buildings, lowering your tax burden and making green projects more impactful.

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Defining These Energy Efficiency Incentives

  • 45L Tax Credit: The credit offers up to $5,000 per unit for new or existing residential buildings that meet specified energy-saving standards. Whether you’re a homeowner, developer, or builder, the 45L credit incentivizes improvements from insulation upgrades to renewable energy installations.
  • 179D Deduction: For larger projects, the 179D deduction provides a deduction on taxable income based on the square footage and energy efficiency gains of your commercial building. From offices to hospitals, this incentive encourages businesses to embrace sustainable designs and construction practices. 

Is Your Building Eligible for 45L or 179D?

45L Tax Credit:

  • Applies to single-family homes, multifamily buildings, condominiums, and other residential dwellings with no height restrictions.
  • The credit amount varies based on compliance with ENERGY STAR certification and prevailing wage requirements.

179D Deduction:

  • Applicable to new or existing commercial buildings over four stories.
  • The deduction amount is based on the square footage and level of energy improvement that exceeds the baseline standards.

Defining These Energy Efficiency Incentives

  • 45L Tax Credit: The credit offers up to $5,000 per unit for new or existing residential buildings that meet specified energy-saving standards. Whether you’re a homeowner, developer, or builder, the 45L credit incentivizes improvements from insulation upgrades to renewable energy installations.
  • 179D Deduction: For larger projects, the 179D deduction provides a deduction on taxable income based on the square footage and energy efficiency gains of your commercial building. From offices to hospitals, this incentive encourages businesses to embrace sustainable designs and construction practices. 

Is Your Building Eligible for 45L or 179D?

45L Tax Credit:

  • Applies to single-family homes, multifamily buildings, condominiums, and other residential dwellings with no height restrictions.
  • The credit amount varies based on compliance with ENERGY STAR certification and prevailing wage requirements.

179D Deduction:

  • Applicable to new or existing commercial buildings over four stories.
  • The deduction amount is based on the square footage and level of energy improvement that exceeds the baseline standards.

See How R&D Credits Can Benefit You

Find out how to maximize your research and development (R&D) credit benefits. Our process is focused on transparency, client service, and deep technical expertise.
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Step 1: Request Complimentary Analysis

Get a free initial consultation to discuss your business's ambitions. After the call, we will request some limited additional information to help us refine your estimated credit benefits. This step usually takes 1-2 hours of your time. 

Step 2: Receive Proposed Scope of Work

After we evaluate the information gathered, we develop an estimated benefit and lay out the R&D study methodology that will best suit your business, along with the associated timeline and fees.

Step 3: Claim Your Credits

Once the full scope of work is agreed to, we request additional information and conduct interviews in order to determine the final amount of R&D costs under section 174 for the R&D credit. We create a detailed deliverable to support the results, including substantiation for the activities included as R&D.

What Other Benefits Do Energy Efficient Buildings Bring?

Investing in energy efficiency extends beyond a reduced tax liability. You’ll also enjoy:

  • Lower energy bills: Reduced energy consumption translates to significant cost savings throughout your building’s lifespan.
  • Increased property value: Green buildings attract tenants and buyers, boosting your property’s market value.
  • Environmental impact: By choosing sustainable solutions, you contribute to a greener future and demonstrate a commitment to social responsibility.

Embrace Green Investments with Confidence

The 45L and 179D credits represent a golden opportunity to make your building projects more economical and ecologically responsible. Partner with Strategic Tax Planning and unlock the full potential of these incentives. We’ll analyze your eligibility, looking to minimize your tax burden while adhering to the compliance requirements.

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FAQs

Unclear about our service? Dive into our FAQs for clarity and keep the questions coming.

Do I need to file additional paperwork for these credits?

Yes, specific IRS forms and documentation are required for both credits. Our team can help you gather and submit the necessary documentation for a smooth process.

Do I need to hire a contractor to claim these tax credits?

While it is not always required, hiring a licensed contractor can ensure your project meets the compliance standards for either credit.

Can I claim both the 45L and 179D for the same project?

No, you can only claim one credit per project. Our team can ensure that you claim the credit that offers the most significant benefits for your circumstance.

View Insights From Our Team

Explore our curated list of downloadable PDFs and other resources for more information. 

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