2020 Residential & Commercial Tax Credit Reinstatements

Residential & Commercial Tax Credit Reinstatements

With the recent signing of the funding bills, H.R.1865 (Further Consolidated Appropriations Act) and H.R.1158 (Consolidated Appropriations Act), the residential energy efficiency tax credit and Section 179D deductions for commercial buildings have been reinstated through 2020, after having previously been expired in 2017. So, how do these reinstatements impact you?

Tax Credits and Deductions for Energy Efficient Homes and Commercial Buildings

Improving a home’s energy efficiency has become an increasingly important factor for both home owners and contractors. With the reinstatement of the residential energy efficiency tax credit in Section 25C of the Federal Tax Code, tax credits can be offered to individuals who have improved the energy efficiency of their homes. According to the ACCA, “for qualified HVAC improvements, homeowners may be eligible to claim 25C tax credits equal to 10 percent of the installed costs, and a maximum credit of $500.”

When it comes to commercial buildings, tax deductions on energy efficient commercial buildings have been reinstated within Section 179D of the Federal Tax Code. AccountingToday states that “under Section 179D, eligible commercial building owners can take a federal-level tax deduction of up to $1.80 per square foot of the building’s envelope if they install property that reduces energy and power costs.” These installations may include a building’s lighting system, HVAC equipment, and building envelope components such as doors, windows, insulation, etc.

These residential and tax credit reinstatements help to encourage home and building owners to move towards higher energy efficiency, which can ultimately reduce home and building operating costs and result in more savings for the future!

For more on energy efficiency in the HVAC world: Energy Efficiency HVAC? It’s More Than Just a Box

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