Tax Incentives for Updating the Lighting at Your Business

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Tax Deductions to Help You Save on LED Upgrades

Looking for financial incentives to help get energy-efficiency upgrades at your commercial building? Great news - Businesses can qualify for an accelerated tax deduction that can greatly reduce costs. And, thanks to recent updates to the Commercial Building Tax Deduction rules, more lighting projects are able to qualify for these incentives![1]

How Does an Accelerated Tax Deduction Work?

With the Commercial Building Tax Deduction (CBTD), you can receive a dollar amount per square foot of your commercial building by reducing your benergy usage. Also, rather than taking the deduction over a period of so many years, you can take it in a single year as a lump sum. So, you can get your cash back sooner to help offset upgrade costs more quickly.

What Types of Projects Qualify?

The CBTD is available for any commercial building that has energy-efficient equipment installed. This includes interior lighting & controls, HVAC systems, and products that are part of the building envelope. Additional qualifications include:

  • Being located in the USA
  • Following 90.1 energy standards
  • Expecting to reduce energy costs by 25% or more (compared to a reference building)[2]
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How Much is the Financial Incentive Amount?

The Applicable Dollar Value (ADV) you can receive through the CBTD is $0.50 per sq. ft. for achieving the 25% energy usage reduction. For every 1% more that your building is able to reduce energy use, you can receive an additional $0.02 per sq. ft. When meeting the standard requirements, the amount you’ll be able to receive is capped at $1.00 per sq. ft.

If specific wage and apprenticeship requirements are met, the ADV amount you could receive goes up to $2.50 per sq. ft. for achieving the 25% reduction of energy use. Then, for every 1% of energy usage reduction beyond that, your incentive will increase by $0.10 per sq. ft. The maximum you can receive under these additional rules is $5.00 per sq. ft.

deduction calculation

How Often Can the Tax Deduction be Claimed?

Under the Inflation Reduction Act, the CBTD can be claimed every 3 years for a commercial building that meets all the necessary requirements (every 4 years if it is owned by a tax-exempt entity).

Getting Your Tax Incentives for Lighting

Taking advantage of the Commercial Building Tax Deduction is a great way to modernize your lighting without breaking the bank. The incentive covers a wide range of lighting options, including advanced smart control systems. Plus, when coupled with utility rebates that reduce your initial investment costs, utilizing these tax incentives energy-efficiency improvements is a no-brainer.

Ready to start your lighting project? Reach out to our team of experts to make it happen. We can help ensure your building runs as efficiently as possible so you can qualify for the highest incentives available as well as:

  • Meeting important deadlines
  • Receiving necessary certifications
  • Completing photometric layouts & 3D models
  • Getting energy-efficiency utility rebates
  • And more!

Learn about our lighting services, available free to customers, or contact us at the options below to get started.

[1] Refers to CBTD, Section 179D of the tax code.

[2] Retrofits projects can alternatively qualify by demonstrating a 25% decrease in energy use (measured in BTU) compared to the pre-retrofit building.