The U.S. Department of Energy (DOE) has launched a web portal to host two tools related to energy tax deductions. The 179D Portal helps estimate tax benefits for projects that reduce energy use by at least 25% through improvements in interior lighting, HVAC, water heating, or building envelope systems.
The DOE said deductions through the portal range from $0.58 to $5.81 per square foot. Generally, solar power is not eligible for the 179D tax benefit.
The base deduction amount per square foot was originally calculated as:
- $0.50 per square foot for a building with 25% energy savings
- Plus $0.02 per square foot for each percentage point of energy savings above 25%
- Up to a maximum of $1.00 per square foot for a building with 50% energy savings
As of 2025, the base value of $0.50 per square foot has increased to $0.58, with a maximum of $1.16.
The portal’s “traditional tax credit” tool is based on designing a structure—or upgrades to a structure—that reduce total annual energy and power costs by 25% or more compared with the “Reference Standard 90.1.” These upgrades must be verified by a third party and designed using a list of certified software tools.
The second tool allows for claiming the tax deduction by examining actual energy usage before and after upgrades. This approach applies only to building upgrades, not new construction.
“Incorporating energy-efficient measures in commercial buildings can save money on utility bills and during tax season,” said Michael Furze, director of DOE’s Building Technologies Office. “The 179D Portal will help building owners identify which combination of energy-efficient technologies can impact the bottom line in a commercial building upgrade or new construction project.”
One change to the 179D program in 2023 was lowering the threshold for tax benefits from 50% to 25%, making it easier to qualify. The program was initially established to incentivize upgrades from 2005 through 2007, with the original 50% threshold. The Inflation Reduction Act, signed in 2022, made the 50%-to-25% change permanent.
Much like the prevailing wage and apprenticeship requirements that apply to larger solar projects, the 179D deduction is maximized by meeting base pay and training standards.
The DOE said future goals for the program include expanding modeling types and tax deduction options.
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