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The One Big Beautiful Bill (OBBB), signed into law on July 4, 2025, included a major shift in tax law, and it’s hitting architects and engineers (A&E) harder than most. Section 179D, a powerful incentive that rewards firms for designing energy-efficient buildings for government and nonprofit clients, is now set to sunset.
However, the good news is that there is still a sizable window to capture this benefit — both retroactively and on active projects — before it’s gone. If A&E firms have designed schools, universities, public safety buildings, municipal facilities, or other public-sector projects in recent years, major tax-saving opportunities are still available, potentially worth hundreds of thousands of dollars, if not more.
What’s Changing with 179D?
Under the new legislation, 179D will no longer apply to projects that start construction after June 30, 2026. That gives firms a defined but shrinking runway to lock in benefits on both current and future projects. Just as importantly, 179D can be claimed retroactively for open tax years. That means designers may still be eligible to claim deductions for work completed as far back as 2021, with no changes to original filings required in many cases.
Why It Matters Now
KBKG has seen A&E firms recover six- and seven-figure deductions by conducting lookback studies and pursuing unclaimed 179D benefits. The process isn’t automatic though, as it requires proactive documentation, certified modeling, and signed allocation letters. This is what’s at stake:
- Projects placed in service between 2021–2023 may still be eligible
- 2021 returns are reaching final amendment deadlines
- Active and upcoming projects must begin construction by June 30, 2026 to qualify
This is a one-time window. Once it closes, the opportunity is gone and those missed deductions don’t come back.
How KBKG Helps
Claiming 179D isn’t just a paperwork exercise. To qualify, designers must meet specific IRS requirements, including certified energy modeling, site inspections, and securing allocation letters from building owners.
KBKG handles the entire process from end-to-end with a team that includes:
- Energy modeling experts who prepare detailed analyses in-house
- Licensed professional engineers who certify your claim
- Government relations specialists who coordinate and secure allocation letters on your behalf
KBKG has helped hundreds of firms across the country capture 179D and guides team through exactly what’s needed to move forward.
Don’t Miss the R&D Tax Credit
The OBBB also expanded the Research & Development (R&D) Tax Credit, making it even more valuable for A&E firms. Many architecture and engineering companies qualify for R&D credits based on their design and innovation work, but too few take full advantage. With enhanced credit amounts and broader eligibility, this is the time to reevaluate claiming R&D credits.
KBKG helps businesses navigate both, walking A&E teams through the new rules, assessing project activity, and helping ensure no benefit is left on the table.
Conclusion
For A&E firms who have completed public-sector projects in recent years, or have any underway today, 179D is an immediate opportunity to improve cash flow and reduce taxable liability. Between now and June 30, 2026, there’s a window to capture years of value, but the time to act is now.
Contact KBKG to schedule a no-cost review of eligible projects for 179D and the expanded R&D Tax Credit.