Largest Single Building 179D Project in History Yields Record Benefit:  As Sunset Approaches, 179D Opportunities Remain in Play

Barring any last-minute congressional activity, the sun is setting on the 179D Tax Deduction.  Under the One Big Beautiful Bill Act (OB3), if construction on a project begins after 6/30/2026, that project is ineligible for 179D.   

On the flip side, that means that construction projects that begin before 6/30/2026 are eligible for the 179D Deduction.  This includes:  

• • Projects that have completed construction  
  • Projects currently under construction  
  • Projects that will break ground by 6/30  
  • Projects that have incurred at least 5% of the total cost by 6/30 (permits, design fees, etc.) 

Bottom line: If construction began before 6/30/26 – whether a day before or a year before – 179D is on the table.   

An Approaching Sunset Doesn’t Mean Opportunity Ceases   

Taxpayers continue to benefit from the 179D Deduction and will continue to benefit from the 179D Deduction, even after the sunset date via look-back study.  

In fact, Capstan recently completed the largest single building 179D study in history.   

Facts:  

• • Owner: Tax-exempt entity  

• • Property: Spacious convention center located on the East Coast 

• • History: Originally constructed in the mid-1980s, the center has undergone multiple rounds of additions and renovations.  The current 179D study focuses on a series of improvements that began in 2022.  

• • Energy-efficient features include:  

• • LED lighting  

• • Double-pane windows and entry doors, insulated foam roofing over original roofing 

• • Gas-fired boilers, air-handling units (AHUs), variable air volume (VAV) distribution boxes, and multiple other HVAC components  

• • Size: 3,200,000 SF 

• • Project completed and study performed in 2024 

Results:  

• Since construction began in 2022 — before the Inflation Reduction Act (IRA) was passed — this project meets the Beginning of Construction exemption to the Prevailing Wage and Apprenticeship Requirements (PWA).  As such, the property is eligible for the maximum benefit available in 2024 ($5.65/SF).   

• 3,200,000 SF x $5.65 = $18,080,000 Deduction Value  

• Since the owner is a tax-exempt entity, they allocated the Deduction between 3 qualified designers.    

New Form 7220 Must be Used to Verify Satisfaction of PWA Requirements  

The above example was exempt from PWA requirements, since construction began before 1/30/2023.  

If construction began after 1/30/2023, taxpayers that satisfy PWA requirements must document said satisfaction using the new Form 7220.   

Successfully meeting the PWA Requirements results in an automatic five-fold increase in an incentive’s value.  This transforms the base 179D Deduction value from $1.19/SF to $5.94/SF (in 2026).    

Form 7220 brings additional documentation requirements – but many taxpayers feel the five-fold benefit is well worth it.  More details on the Form are available here.    

Other Relevant Sunsets to Keep in Mind  

The 179D Deduction is not the only energy-incentive to be assigned a sunset under the OB3:   

Note that the dates and associated nuances vary by incentive.   

Taking the Next Step 

Energy-efficient incentives can still bring benefit, if a thoughtful approach is employed.  Consulting with a tax strategies professional is the best way to optimize results – they have the knowhow to navigate timing, eligibility, and documentation, all while proactively seeking out other opportunities to compound the benefit.