AIA Supports Legislation for Energy Efficiency Tax Incentive

The American Institute of Architects (AIA) has voiced its support of bipartisan legislation that makes designers of hospitals, schools, tribal community facilities and other non-profits eligible for an energy efficiency tax incentive that is already saving tax-payers money across the country.

H.R. 6376, introduced by Rep. Dave Reichert (R-WA) and co-sponsored by Rep. Tom Reed (R-NY), Rep. Earl Blumenauer (D-OR), and Rep. Chris Van Hollen (D-MD), also modifies Section 179D of the tax code, the Energy-Efficient Commercial Building Deduction, to make small to midsized architect firms organized as subchapter S corporations eligible for the deduction.

“H.R. 6376 gives non-profits the ability to allocate this energy savings tax incentive to designers,” said AIA President Russell Davidson, FAIA. “It also provides an opportunity for schools and hospitals to save money when architects deploy technologies that make buildings more energy efficient.” 

The section 179D tax deduction was originally passed by Congress as part of the Energy Policy Act of 2005 in direct response to broader energy usage and independence concerns. According to data released by the U.S. Department of Energy, buildings are responsible for 73 percent of all electricity consumption in the U.S., with about half of that coming from commercial buildings.

In an effort to curb this trend and encourage broader energy efficiency, section 179D allows qualifying building owners and businesses to receive an up to $1.80 per square foot tax deduction for their energy efficient buildings placed into service during all open tax years.

Architects can also qualify for 179D under a special rule for public property, if they’ve enhanced the energy efficiency of a new government-owned building or made energy-saving renovations and retrofits to existing government-owned buildings. As government entities do not traditionally pay tax, the owners of these buildings can allocate the accrued tax savings to architects who have designed the energy-saving improvements.

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