Last Tuesday, September 22, 2015, the Senate Energy Committee has released their latest proposed energy tax legislation. This comprehensive energy bill seems to focus on more aggressive incentives than previous iterations.
In addition to its extensive list of changes, the bill proposes changes to Section 179D. If enacted the 179D would become two new deductions. The first is a Deduction for New Energy Efficient Commercial Buildings, which will be called 179D; and the second Energy Efficiency Deduction for Existing Commercial Buildings, which will be called 179F.
Energy deductions work by comparing current buildings to standards by the government and measuring how much more efficient they are in comparison. In the case of new buildings, if a building is 25% more efficient then it will qualify for deductions starting at $1.00 per square foot. These deductions could be as high as $4.75 per square foot for more efficient buildings.
If a building has been retrofitted with new lighting fixtures or equipment, they may qualify for even higher deductions. When a 20% reduction is confirmed by a third-party firm, the building will qualify for a deduction worth $1.25 per square foot. If the third party firm confirms a higher reduction in energy consumption, the retrofitted buildings can be eligible for deductions as high as $9.25 per square foot.
It is unlikely for the bill to be passed under it’s current form. However, they show insights onto the future of energy bills. This proposed bill shows an interest in providing new buildings the opportunity to earn even higher deductions, but shows a further interest in providing incentives for those who upgrade their buildings. These assumptions can be useful to further understand developments in upcoming passable energy bills.
The full bill is available from the Senate energy committee’s websites here