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IRA Energy Efficient Deduction Calculator

Section 179D provides up to $5/sqft deduction for energy efficient buildings.

Building sqft

Energy reduction %

Prevailing wage (1=yes)

Tax rate %

179D deduction

$350,000

Tax savings

$129,500

Deduction / SF

$3.50

How the math works

With PW: $2.50/SF at 25% reduction + $0.10/SF per extra % up to $5 at 50%. × SF. Tax savings = deduction × rate.

100k × $3.50/SF (35% reduction w/ PW) = $350k deduction × 37% = $129.5k tax savings.

Editorial noteMaintained by EveryCalc - Reviewed June 2026

EveryCalc calculators are designed for fast, practical estimates with transparent inputs and no required account. We use plain formulas, visible assumptions, and related tools so visitors can check the result from more than one angle.

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How this calculator works

What this page estimates

This IRA Energy Efficient Deduction Calculator is built to give a quick, browser-based estimate for ira energy efficient deduction. Section 179D provides up to $5/sqft deduction for energy efficient buildings. The inputs stay on the page during normal use, and the result should be treated as an estimate for planning, comparison, or education rather than professional advice.

Calculation approach

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How to interpret the ira energy efficient deduction result

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How to Use

Enter building sqft.
Enter energy reduction %.
Enter prevailing wage paid (1=yes).
Read 179D deduction.

Frequently Asked Questions

What is 179D?

Section 179D of IRC: tax deduction for energy-efficient commercial building improvements. 2022 Inflation Reduction Act expanded from $1.88/sqft to up to $5/sqft. Requires energy reduction vs ASHRAE reference building (25-50% reduction). Applies to new construction, major renovations, lighting upgrades, HVAC improvements, envelope improvements. Non-profit owners can assign to designer/contractor.

Deduction amounts?

Base: $2.50/sqft at 25% energy reduction, sliding scale to $5.00/sqft at 50%+. Without prevailing wage: $0.50-1.00/sqft (diminished). Each percentage point of reduction above 25% adds $0.10/sqft until 50% max. Certification required from qualified professional using DOE-approved software. Typical projects: $300-2,500 per building for certification cost.

Eligible upgrades?

Lighting: LED retrofits, daylighting controls, occupancy sensors. HVAC: high-efficiency equipment, VRF systems, smart thermostats, economizers. Envelope: insulation, window upgrades, cool roofs. Interior: zone controls, ventilation. Whole-building approach usually generates highest deduction. Partial improvements (lighting-only, etc.) typically generate $1-2/sqft vs $3-5/sqft for whole-building.

When does it pay off?

On 100k sqft building: $5/sqft = $500k deduction × 37% tax rate = $185k tax savings. Certification + design cost: $15-50k. Net savings $135-170k. Combined with utility rebates and potential solar ITC, payback periods of 2-5 years common. Upgraded building also commands rent premium. Institutional commercial owners increasingly pursue 179D systematically on all renovation.