The Energy Efficient Commercial Buildings Deduction is Section 1331 of the Energy Policy Act of 2005.
The Commercial Buildings Deduction, advocated by the National Electrical Manufacturers Association (NEMA) and the Natural Resources Defense Council (NRDC), is a special financial incentive for building owners to adopt the most energy-efficient lighting strategies.
The Deduction provides up to the entire cost of energy-efficient interior lighting to be deducted on the owner’s taxes in the year the lighting is placed in service, capped at $0.60/sq.ft., if the new lighting’s power use reduces lighting power density below the maximum allowable lighting power densities listed in ASHRAE/IES Standard 90.1-2001, and if other requirements are met.
LightingTaxDeduction.com website offers a section that describes the Commercial Buildings Deduction in detail, with excerpts from the law inserted. The Appendices in this section provide links to download either all of EPAct 2005 or just Section 1331, which created the Commercial Buildings Deduction.
What is the difference between a tax deduction and a tax credit?
The Commercial Buildings Deduction is a tax deduction, not a tax credit. A tax credit is a direct dollar-for-dollar reduction of tax liability. A tax deduction is a cost subtracted from adjusted gross income when calculating taxable income; therefore, tax liability is not reduced dollar for dollar, but in proportion to the taxpayer’s tax bracket.