Reduced Energy Usage Can Save You a Bundle on United States Taxes
Last year’s CARES Act saved business owners money on HVAC retrofits, commercial stainless steel HVAC products, and more. And while that program is finished, for the 2021 tax year, commercial building owners may be eligible for additional tax deductions, credits, or incentives associated with energy savings via certain building systems.
Under Section 179D of the IRS Code, tax deductions for energy efficient commercial buildings were made permanent, as part of the Consolidated Appropriations Act of 2021, for buildings or systems placed in service after December 31, 2017.
Tax Law for New Commercial HVAC Equipment
Owners or designers of commercial buildings or systems can take a tax deduction of up to $1.80 per square foot if they can demonstrate at least a 50 percent reduction in energy usage through improvements to heating, cooling, ventilation, hot water, and interior lighting.
The 50 percent reduction is a comparison to a Reference Building that meets the minimum requirements of Standard 90.1-2001. Receptacles, process loads, cooking, elevators, and refrigeration cannot be taken into account to determine whether the reduction is achieved.
What If I Can’t Reach 50 Percent Energy Savings?
Partial deductions up to 60 cents per square foot are available for qualifying measures, including 25 percent savings for interior lighting, 15 percent for commercial HVAC equipment and hot water systems, and 10 percent for the building envelope.
How Do I Know If I Qualify for This Tax Deduction?
The IRS requires that you use qualified computer software to calculate whether your commercial building energy savings meet federal tax incentive requirements.
If your property was in service on or before December 31, 2020, the reference for the calculation is ANSI/ASHRAE/IESNA Standard 90.1-2007. Watch for the new IRS Notice release for properties placed in service on or after January 1, 2021, for the 2021 tax year.
You can use any of the following software to calculate your energy savings:
- Design Builder, version 6.1.8.021 or 5.0.007
- DeST, version 2.0-190709
- DOE-2.2, version 48y
- EnergyGauge, version 6.10
- EnergyPlus®, version 9.1.0, 9.0.1, 8.8.0, 8.7.0, 8.6.0, or 8.3.0
- eQuest, version 3.65
- Hourly Analysis Program (HAP), version 5.11, 5.10, 5.01, or 5.00
- IES Virtual Environment, version 2021, 2019, 2018, 2017, or 2016
- OpenStudio® with EnergyPlus, version 2.7.0 with EnergyPlus version 9.0.1 or version 2.3.0 with EnergyPlus version 8.8.0
- TAS, version 9.5.1, 9.5.0, 9.4.4, 9.4.3., 9.4.2., 9.4.1, or 9.4
- TRACE 3D Plus, version 3.10.24, 2.21.39, 2.04.20, or 1.25.286
- TRACE 700, version 6.3.5, 6.3.4, or 6.3.3
- TRYNSYS, version 18.01.0001 or 18.00.0019
2021 Tax Credits for Renewable Energy
For the 2021 tax year, renewable energy tax credits are available for newly built homes and existing homes using geothermal heat pumps, small wind turbines, solar energy, fuel cells, and biomass fuel stoves. However, these tax credits do not currently extend to commercial buildings and are only for residential applications.
Verifying Your Eligibility for Tax Deductions for Commercial HVAC Equipment and More
Building owners and designers looking to save money on 2021 taxes should speak to their trusted tax professional or certified public accountant to learn more about qualifying. Always seek professional advice before including deductions on your tax return.
Where to Find Commercial Stainless Steel HVAC Products for Your Efficient System
AJ Manufacturing, founded in the 1920s in Kansas City, Missouri, is a world-class sheet metal product business specializing in the fabrication of custom stainless steel HVAC components, particularly for critical environments like hospitals, laboratories, and pharmaceutical production.
Our commercial stainless steel HVAC products are made-to-order using the latest technology for precision, including CNC routing and laser cutting. Our team of professional fabricators is skilled in finishing HVAC components, and every piece is tested for effectiveness and proper function before we ship to your job site. We produce everything from return grilles to ceiling diffusers, to stainless steel air outlets, and much more. Our full catalog of air distribution parts is available on our website.
Request an Estimate for Your Building
To learn more about our projects, or to get a custom estimate for your project, contact AJ Manufacturing. Reach our national sales manager, Amy VanWagner, via email or by phone at (816) 231-5522.