Federal Tax Deduction · §179D · Terminated

COMMERCIAL BUILDING ENERGY DEDUCTION

Section 179D was a federal tax deduction for energy-efficient commercial building property. The One Big Beautiful Bill Act terminated it for property whose construction begins after June 30, 2026. Projects that began construction on or before that date can still claim it.

Status: terminated for new construction starts

Section 179D does not apply to property whose construction begins after June 30, 2026 (IRC §179D, as amended by P.L. 119-21, signed July 4, 2025).

Updated September 10, 2026

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6/30/2026

CONSTRUCTION START

Construction beginning after this date does not qualify

Deduction

BENEFIT TYPE

Worth the deduction times the marginal tax rate

TRANSFERABLE

Not a §6418 credit

DIRECT PAY

Not eligible for §6417

What Happened

HOW SECTION 179D ENDED

What 179D Was

A tax deduction for energy-efficient interior lighting, HVAC and hot water, and building envelope property in commercial buildings, sized by square footage and energy savings. Owners of government and tax-exempt buildings could allocate it to the designer.

What the OBBBA Changed

The One Big Beautiful Bill Act (P.L. 119-21), signed July 4, 2025, terminated 179D for property whose construction begins after June 30, 2026.

Who Can Still Claim It

A project that began construction on or before June 30, 2026 can still claim the deduction in the tax year the property is placed in service.

Source: 26 U.S.C. §179D, as amended by the One Big Beautiful Bill Act (P.L. 119-21).

Still Eligible

WHO CAN STILL CLAIM 179D

A project that began construction on or before June 30, 2026 can still take the deduction in the year the property is placed in service. Before filing:

1. Document when construction began. The termination turns on the date construction begins, not the date the property is placed in service.

2. Do not assume a 5% safe harbor applies. The IRS has issued no 179D-specific beginning-of-construction guidance, so agree the approach with your tax advisor.

3. Claim the deduction for the tax year the property is placed in service, with the same energy modeling and certification that applied before.

4. Value it as a deduction: its cash value is the deduction amount times the owner's marginal tax rate, not a dollar-for-dollar credit.

5. Plan to use it yourself. 179D cannot be sold under §6418 or received as direct pay under §6417.

A Deduction, Not a Credit

179D reduces taxable income. Its cash value is the deduction amount times the owner's marginal tax rate. Booking the face amount as if it were a credit overstates what it is worth.

Available Now

WHAT YOU CAN USE INSTEAD

The One Big Beautiful Bill Act changed federal tax law only. New York State, NYC and utility programs are still available, and they are what IncentEdge's verified catalog covers.

New York

New York State, NYC & Utility Programs

NYSERDA, NYC and utility programs are not affected by the OBBBA. IncentEdge verifies them against their published sources.

Catalog

All Verified Programs

Browse the programs in the IncentEdge catalog, with their sources and verification dates.

§48E ITC

Investment Tax Credit

For solar or storage at the building. Wind and solar must have begun construction by July 4, 2026, or be placed in service by December 31, 2027.

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FAQ

FREQUENTLY ASKED QUESTIONS

Is Section 179D still available?

Only for property whose construction began on or before June 30, 2026. The One Big Beautiful Bill Act (P.L. 119-21), signed July 4, 2025, terminated the deduction for property whose construction begins after that date.

My project began construction before July 1, 2026. Can I still claim 179D?

Yes, in the tax year the property is placed in service. Keep records showing when construction began. The IRS has issued no 179D-specific beginning-of-construction guidance, so do not assume a 5% safe harbor applies. Agree the approach with your tax advisor.

How much is a 179D deduction worth?

It is a deduction, not a credit. It reduces taxable income, so its cash value is the deduction amount times the owner's marginal tax rate, well below a dollar-for-dollar credit of the same face amount.

Can a 179D deduction be sold or received as direct pay?

No. Section 179D is not transferable under IRC §6418 and is not eligible for elective (direct) pay under §6417.

What is available for New York buildings now?

The One Big Beautiful Bill Act changed federal tax law only. New York State, NYC and utility programs, such as NYSERDA and Con Edison incentives, are not affected, and they are what IncentEdge's verified catalog covers. For solar and storage, the federal ITC is still available, subject to the new deadlines for wind and solar.

Available now

See What New York Still Offers

Section 179D has ended for construction beginning after June 30, 2026. New York State, NYC and utility programs were not affected, and IncentEdge verifies them against their published sources.

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