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Federal Tax

Nonprofits Seek Updated Standard for Energy-Efficient Building Deduction

Joseph Boris  

Joseph Boris  

Four nonprofit organizations have asked the Treasury Department to update the standard used by builders in claiming a tax deduction for energy-efficient buildings under the Inflation Reduction Act’s expansion of Code Sec. 179D.

In a letter dated October 11 and released by Treasury on October 25, the organizations said that although the law reduced to 25% the savings threshold needed to claim the Section 179D deduction, it didn’t change the reference standard new buildings must exceed to qualify for the deduction.

The letter cited ANSI/ASHRAE/IES Standard 90.1-2007, which was developed by the American Society of Heating, Refrigerating and Air-Conditioning Engineers (ASHRAE) and the Illuminating Engineering Society (IES). It provides minimum requirements for energy-efficient design of most buildings in the U.S. but is outdated for tax incentive purposes, the organizations said.

“We are concerned that this backstop standard sets a low performance bar that will allow significant free ridership in the use of this tax deduction, including allowing buildings in many states to receive the deduction for performance that is required under state code,” the letter read.

“We urge you to address this by acting expeditiously to affirm the most recent ANSI/ASHRAE/IES Standard 90.1-2019 as quickly as possible,” read the letter. It was addressed to Treasury Secretary Janet Yellen and signed by the American Council for an Energy-Efficient Economy, the Institute for Market Transformation, the New Buildings Institute, and the U.S. Green Building Council.

 

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