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Tax Deduction Expansion Gives Tax-Exempt Orgs Leeway (1)

Sept. 20, 2022, 8:45 AMUpdated: Sept. 21, 2022, 1:23 PM

The Inflation Reduction Act expanded an energy-efficiency tax deduction that will give tax-exempt organizations more negotiating power with taxpayers who build their commercial buildings.

Buildings owned by tax-exempt entities can qualify for the energy-efficiency tax deduction under Section 179D, and because the entities are nontaxable, the entities can allocate part of the tax deduction toward the “designers,” such as architects and engineers. Previously, only commercial building owners and designers of buildings owned by government entities were eligible for the deduction.

Nontaxable entities include schools, hospitals, charitable organizations, churches, and tribal organizations.

“We do have a lot ...