The 179D tax deduction and 45L tax credit are two significant financial incentives promoting energy efficiency in commercial and residential buildings, respectively. The 179D deduction targets commercial buildings, providing incentives for efficiency upgrades based on square footage and improvement over baseline standards. It encompasses various commercial real estate, encouraging energy efficiency across the sector.
In contrast, the 45L credit focuses on the residential market, offering a dollar-for-dollar tax credit of up to $5,000 for making homes more efficient. Eligibility for both programs involves meeting specific efficiency benchmarks set by recognized authorities such as ASHRAE, ENERGY STAR, or Zero Energy Ready Home (ZERH). Financially, the 179D deduction lowers taxable income, while the 45L credit directly subtracts dollars from taxes owed, often providing more immediate and substantial savings. Recent legislative developments, such as the Inflation Reduction Act of 2022, have updated both programs, imposing stricter certification standards but increasing deduction and credit amounts.
Properly claiming these incentives involves energy analysis and certification by qualified professionals to ensure compliance and maximize savings in making buildings greener. For more information click the link!