Act Now to Maximize Your §179D Tax Deduction!

On June 18th, 2024, the IRS issued the final regulations for IRS Notice 2022-61, providing guidance on the prevailing wage and apprenticeship requirements for §179D. This is a major clarification for the Inflation Reduction Act (IRA) of 2022. While there is still a lot of confusion surrounding the latest update, taxpayers are always seeking additional guidance to navigate and claim these complex tax incentives.

Let’s go over some of the key highlights from the notice.

Key Highlights from the Notice for §179D

Clarifications as part of Final Guidance: The prevailing wage and apprenticeship requirements apply only to the installation of § 179D-qualified property. These requirements do not extend to any alterations or repairs after the property is placed in service. 

Additionally, it was clarified, that the regulation does not apply to components that fall outside the scope of Section 179D. Only property that meets the specific criteria for energy efficiency under Section 179D is subject to the regulations and eligible for the associated deductions.

Timing is Critical: Projects that commence before January 29, 2023, are exempt from the new prevailing wage and apprenticeship requirements for the increased deduction amount of up to $5.65 per square foot. 

Prevailing Wage Requirements:

  • Laborers and mechanics employed in a project’s construction, alteration, or repair must be paid prevailing wages.
  • Maintain comprehensive records to demonstrate compliance with the prevailing wage rates published by the Secretary of Labor.

Apprenticeship Mandates:

  • Apprentices must account for 12.5% or 15% of total labor hours. The percentage is 12.5% for projects on which construction started in 2023 and 15% for projects on which construction starts in 2024 or later.
  • Contact the Department of Labor for guidance if prevailing wage determinations are unavailable for your area.

Why You Need to Act Fast

While exemption from prevailing wage and apprenticeship requirements offers a unique opportunity, projects started before January 29, 2023, can secure the maximum possible energy tax incentives without additional PW&A compliance burdens.

Projects After Jan 29, 2023

Even if your project starts after this deadline and doesn’t meet the prevailing wage and apprenticeship requirements, you can still benefit from the §179D tax deduction—albeit at a reduced rate. 

Take the Next Step

Don’t miss this limited-time opportunity to enhance your energy tax incentives. If you have any questions or need assistance in getting your projects certified, our team is here to help. Contact us today to schedule a consultation and ensure you maximize §179D tax deduction.

Walker Reid is a licensed professional engineer specializing in §179D deduction claims. Our expert team of engineers can help you understand energy tax incentives.