Section 179D Deduction Calculator

In 2026, the maximum 179D deduction is $5.81 per square foot for buildings meeting prevailing wage requirements with at least 25% energy reduction across all three systems. Without prevailing wage, the maximum drops to ~$1.16/sq ft. Partial deductions are available for single-system improvements — roughly one-third of the full rate per qualifying system.

Projects must begin construction by June 30, 2026 to qualify for the current inflation-adjusted 179D deduction rates. Projects starting after this date may face different rules or reduced rates. Work with a qualified tax advisor to confirm your timeline qualifies and ensure documentation is in place before construction begins.

For private commercial buildings, the building owner typically claims the deduction. For government-owned buildings, tax-exempt organizations, and public schools, the deduction is allocated to the designer or engineer who designed the qualifying energy systems — a rule that was significantly expanded by the Inflation Reduction Act (IRA) of 2022. This opens up substantial deduction opportunities for architects, engineers, and energy consultants working on public projects.

Yes — it's a 5× multiplier. Meeting prevailing wage requirements unlocks up to $5.81/sq ft. Without compliance, your maximum is ~$1.16/sq ft. On a 100,000 sq ft building, that's the difference between a $581,000 deduction and a $116,000 deduction — a $465,000 swing. For projects where prevailing wage is feasible, the documentation effort is almost always worth it.

Yes — partial deductions are available for single qualifying systems. If only your HVAC qualifies, you can still claim approximately $1.94/sq ft (with prevailing wage) or $0.39/sq ft (without). Each of the three systems — HVAC, lighting, and building envelope — can qualify independently as long as it achieves the required energy reduction versus the ASHRAE baseline. A certified energy model must document each system's performance.