The EPAct 179D Tax Deduction

When property owners purchase and install a new lighting system, under standard IRS depreciation tables, they will be paying taxes on the lights for the next 39 years. Through the use of the §179D Deduction, the property owners may fully depreciate the cost of the lighting improvements in Year One, subject to a cap.

According to the Interim Rules for EPAct Lighting Projects:

The lighting system energy savings target is a LPD (Lighting Power Density), or watts per square foot, that is 25% to 40% lower than the minimum requirements of ASHRAE Standard 90.1–2001.

The potential amount of the EPAct tax deduction is $0.30 to $0.60 per square foot depending upon the percentage that the LPD is reduced. For warehouses, the lighting power density (W/sq. ft.) must be 50% lower.

In addition to demonstrating a reduction in lighting power density control provisions relating to lighting systems must be met.