The National Electrical Manufacturers Association (NEMA) today commended the Senate Finance Committee on its approval of a two-year extension of the Energy Efficient Commercial Buildings Tax Deduction, also known as Section 179D, as part of the Expiring Provisions Improvement Reform and Efficiency (EXPIRE) Act.
According to NEMA President and CEO Evan R. Gaddis, “179D has been very effective in encouraging commercial building owners to make energy efficiency upgrades to their buildings. As Congress continues to work toward comprehensive tax reform, it is essential that this provision remain in effect.
The provision allows a taxpayer to take a deduction equal to commercial building energy-efficiency expenditures made by the taxpayer as part of the building’s interior lighting systems, heating, cooling, ventilation, and hot water systems, or building envelope. Certification must be obtained to verify that the retrofits are installed as part of a plan to reduce energy costs by 50 percent or more in comparison to a specified minimum standard.
The bill passed today makes some modifications to the 179D incentive. Tribal governments and 501(c)(3)non-profit organizations would be permitted to transfer the deduction to the architect or designer primarily responsible for designing the energy efficiency project. The ability to transfer the deduction is currently available only for public building projects.
Also, under the new provision the 50 percent energy savings certification would be calculated on energy efficiency improvements above a new baseline reference. The approved modification moves the baseline to a more current standard.
The Commercial Building Tax Deduction was enacted into law as a provision of the Energy Policy Act of 2005, and represented the first performance-based federal tax incentive aimed at energy efficiency improvements in commercial buildings. Congress has acted twice to extend the provision. The last extension was for five years and expired on December 31, 2013.
"The two-year extension would give certainty to the marketplace,” Gaddis said. “In the meantime, NEMA will continue to advocate for a dramatically simplified tax code to improve U.S. manufacturing competitiveness.”
NEMA is the association of electrical equipment and medical imaging manufacturers, founded in 1926 and headquartered in Rosslyn, Virginia. Its nearly 400 member companies manufacture a diverse set of products including power transmission and distribution equipment, lighting systems, factory automation and control systems, and medical diagnostic imaging systems. Total U.S. shipments for electroindustry products exceed $100 billion annually.
Phallan K. Davis