Section 179D and 45L Have Sunset — But Not for Projects That Started in Time

What changed, and when

The One Big Beautiful Bill Act, enacted July 4, 2025, ended two long-running energy efficiency incentives. The section 179D deduction for energy efficient commercial building property terminates for property whose construction begins after June 30, 2026. The section 45L credit for new energy efficient homes terminates for homes acquired after that same date.

Both dates have now passed. If you are planning a project today, these incentives are not part of the arithmetic, and any firm telling you otherwise is selling something that is no longer there. We would rather say that plainly than let you budget around a deduction that has expired.

What is still available

The sunset applies to when work began or when a home was acquired, not to when the claim is made. Projects that began construction before July 1, 2026 remain within the rules that applied to them, and the certification work to substantiate a section 179D deduction or a section 45L credit on those projects can still be done.

Separately, prior tax years that are still open to amendment may contain unclaimed deductions or credits. For section 179D in particular, a taxpayer who never claimed the deduction on qualifying property may be able to capture it through a change in accounting method rather than by amending, depending on the facts.

Who this still applies to

Commercial building owners who built or substantially retrofitted before the cutoff, where lighting, HVAC, or building envelope improvements met the efficiency thresholds. Homebuilders and multifamily developers with units acquired before the cutoff. And designers — architects, engineers, and design-build contractors — who worked on government or tax-exempt buildings and may be eligible for an allocated section 179D deduction, which is the piece most often left unclaimed because the designer does not realize an allocation is available to them.

Both incentives require third-party certification and modeling against the applicable standards. That work has to be done properly to be supportable, and it is not something to reconstruct casually years after the fact.

What certification actually requires

Neither incentive is claimed on assertion. Section 179D requires energy modeling against the applicable ASHRAE reference standard for the year in question, performed with qualified software, plus a certification by a licensed engineer or contractor in the jurisdiction where the building sits, and a physical inspection confirming the systems were installed as modeled.

Section 45L similarly requires that each dwelling unit be certified by an eligible certifier against the applicable program standards, on a unit-by-unit basis rather than for the development as a whole. Because the standards changed over the years these incentives existed, a project has to be measured against the rules in effect for its own year, which is a common source of error in look-back work done quickly.

The designer allocation most people miss

The piece most often left on the table is the section 179D allocation for designers. When the building owner is a government body or, for later years, a tax-exempt organization, that owner has no tax liability to reduce and can allocate the deduction to the person primarily responsible for designing the property — the architect, engineer, or design-build contractor.

Firms that have done public schools, municipal buildings, courthouses, military housing, or university work frequently qualify and have never claimed it, largely because the deduction attaches to a building they do not own and so never appears in their own records. The allocation has to be obtained in writing from the owner, which is a practical step that gets harder the longer you wait after the project.

The narrow, honest pitch

This is not a growth service. It is a closing window, and the value in it is entirely in projects that already happened. If you built or designed qualifying property in time, there may be a deduction sitting unclaimed. If you did not, there is nothing here for you and we will tell you that in the first conversation rather than after an engagement letter.

Whether a specific project qualifies depends on its construction start or acquisition date, the efficiency standards in effect for that year, and your open statute. Bring us the dates and we can tell you quickly whether it is worth pursuing.

Talk to an Enrolled Agent

This article is general information, not individual tax advice. Eligibility depends on your project's construction start or acquisition date and the standards in effect for that year — nothing here predicts a result. To have the dates checked, book your free review, or call or text (323) 900-0305.