Cutting down on energy costs is beneficial for companies long term, but making the upfront investment to cut those costs can be significant. However, some little-known federal incentives may help with the cost of transitioning your building into an energy efficient one.
Commercial Buildings Energy Efficiency Tax Deduction
Tax deductions of $1.80 per square foot are available for improvements to three building systems: (1) interior lighting; (2) heating, cooling, ventilation, and hot water; or (3) the building envelope. Examples include the installation of new, energy-efficient lighting systems, water heaters, furnaces, boilers, central air conditioners, windows, doors, siding and roofs, as well as caulking, weather-stripping, duct/air sealing, and insulation. The improvements need to be installed between January 1, 2006 and December 31, 2013 to qualify, and improvements already installed can be retroactively eligible. The improvements must be part of a plan designed to reduce energy costs by 50% as compared to a reference building; however, a partial tax deduction is available for any improvements that result in at least a 16% reduction in energy use.
Energy Investment Tax Credit
An investment tax credit of up to 30% can be earned by adding solar, wind, geothermal or fuel cell technology to your building’s energy system. Cash grants are available in lieu of the tax credit.
Rural Energy for America Program
This program offers grants and loan guarantees for the purchase and installation of energy efficiency improvements to buildings in rural areas. Don’t automatically assume your project does not qualify; the definition of “rural” is quite broad and includes many areas with significant urban development.
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