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179D Tax Deduction

179D Tax Deduction Vermont

Our team of engineers and tax experts will obtain the maximum 179D deductions available in the state of Vermont, following IRS guidance. The deduction is up to $5.00/sq ft for energy-efficient lighting, HVAC systems, and the building envelope. The process for obtaining the 179D deduction in Vermont requires a detailed analysis that must be certified by a qualified third party. KBKG has the in-house expertise and the required professional qualifications to certify your Vermont property as required by the IRS.

Case Study: Vermont

An office building in Burlington, Vermont, with 16,558 square feet, qualified for the 179D HVAC deduction.

KBKG successfully obtained $9,935 in total 179D tax deductions.

What is a 179D eligible improvement?

Taxpayers in Vermont that invest in ground-up construction or in improvements to their existing buildings are potentially eligible for 179D deductions. Eligible improvements must reduce energy use by investing in any of the following categories: a building's envelope, HVAC, and/or interior lighting systems. There are different ways to pursue a deduction, and all require certification by a qualified expert.

What are 179D eligible deductions for Architects & Designers?

Architects and designers in Vermont who implement energy-efficient designs on government buildings are also eligible for the deduction if their design meets the criteria.

Eligibility Expansion in 2023 and forward includes Tax-Exempt Entities

In 2022 and prior years Architects, Engineers, and Design-Build contractors are eligible to receive allocations on projects they designed for federal, state, and local government-owned buildings. Starting in 2023 they can now ALSO receive allocations for their design work on the tax-exempt entities listed below. This means many building types that were previously ineligible to participate in 179D now can!

Now eligible tax-exempt entities include:

  1. charitable organizations,
  2. churches & religious organizations,
  3. private schools & universities,
  4. private foundations,
  5. political organizations,
  6. other non-profits,
  7. Native American tribal governments, and
  8. Alaska Native Corporations

What are the Benefits of the 179D Tax Deduction?

Size of Improvement
Partial Tax Deductions Available Prior to 2023
Maximum Tax Deduction 2022
Maximum Tax Deduction 2023
Lighting
HVAC
Envelope
50,000 sf
$15.75K - $31.5K
$31.5K
$31.5K
$94K
$250K
100,000 sf
$31.5K - $63K
$63K
$63K
$188K
$500K
300,000 sf
$94.5K - $189K
$189K
$189K
$564K
$1,500K

Who are the Ideal Candidates for the 179D Tax Deduction?

Unlike most deductions, which are based on the amount spent, this deduction is primarily based on affected square footage. Ideal candidates in Vermont will generally have improvements with a square footage of at least 50,000 square feet. A wide range of improvements, from simple lighting retrofits to full-scale construction projects, qualify for this timely tax break. Other great candidates include regional or national chains with multiple locations.

What is the Process for Claiming a 179D Tax Deduction?

The basis for developing and supporting this deduction is a detailed engineering analysis, as prescribed by the IRS. Our multi-disciplinary team of engineers and tax experts will ensure that you obtain the maximum available deductions while following IRS guidance to properly certify the tax deductions. Additionally, our team can help you claim deductions that were missed from prior years.

What Improvements are Eligible for the 179D Deduction?

Taxpayers in Vermont that invest in ground-up construction or in improvements to their existing buildings are potentially eligible for 179D deductions. Eligible improvements must reduce energy use by making investments in any of the following categories: a building’s envelope, HVAC, and/or interior lighting systems. There are different ways to pursue a deduction and all require comparison to the ASHRAE Standards and certification by a qualified individual.

Building Envelope
Energy efficient construction or improvements to walls, floors, roofs, fenestrations, and doors
HVAC
Improvements relating to energy efficient HVAC systems
Lights
Construction or improvements to building lights for energy efficiency

179D Tax Insights

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