A key federal tax deduction for energy-efficient commercial buildings will sunset in 2026.

Read on to see what’s changing, and how Ayming can help.

The recently passed “One Big Beautiful Bill” (OBBB) introduced new legislation, and an expiration date has been set for the Section 179D energy-efficient commercial buildings deduction. The new law is set to phase out eligibility for projects beginning construction after June 30, 2026.

If your organization is planning upgrades or new construction, here’s what you need to know – and why now is the time to act.

What’s Changing?

Projects starting after June 30, 2026 will no longer qualify for Section 179D.
- To secure the deduction, you need to ensure construction projects begin before mid-2026 to qualify. Commercial Building Owners, architects, engineers, and contractors can still claim up to $5.81 per square foot for energy saving improvements through that deadline.
179D can still be claimed for prior-year projects
- Deductions for properties linked to prior tax years should still be claimed via amended returns and Form 7205s.
This creates a limited window for tax planning, project scheduling, and energy-efficiency integration.
- Although the deduction is ending, the remaining time gives developers and design professionals vital time to accelerate planned upgrades and lock in savings on energy-efficient investments.

Why it matters

With energy costs on the rise and sustainability mandates becoming more stringent, Section 179D has been a cornerstone incentive for driving commercial building efficiency upgrades and rewarding sustainable design. The deduction has supported projects that reduce consumption, enhance occupant comfort, and align with ESG objectives.

The pending sunset makes this the final opportunity for:

Owners and developers – to begin qualifying projects before June 2026.
Design professionals – to incorporate energy efficient systems that meet ASHRAE criteria.
Construction teams – to align project schedules with the deduction timeframe.

The Countdown Has Begun – We’ll Make Sure You Don’t Miss Out

You can lock in your 179D deduction as long as your project breaks ground before June 30, 2026. Our team of experts are here to personally support your strategy to maximize benefits from Section 179D before it expires:

Project feasibility review – identify eligible projects and calculate potential savings.
Design integration support – ensure energy-efficiency upgrades meet IRS and ASHRAE standards.
Tax planning coordination – work with your CPA to align project timing with eligibility window.
Alternative incentives guidance – explore state or utility-based programs to supplement federal incentives.