Energy efficient commercial buildings deduction

There shall be allowed as a deduction an amount equal to the cost of energy efficient commercial building property placed in service during the taxable year. The deduction under subsection (a) with respect to any building for any taxable year shall not exceed the excess (if any) of— the product of— For purposes of paragraph (1)(A)(i), the applicable dollar value shall be an amount equal to $0.50 increased (but not above $1.00) by $0.02 for each percentage point by which the total annual energy and power costs for the building are certified to be reduced by a percentage greater than 25 percent. In the case of any property which satisfies the requirements of subparagraph (B), paragraph (2) shall be applied by substituting “$2.50” for “$0.50”, “$.10” for “$.02”, and “$5.00” for “$1.00”. In the case of any energy efficient commercial building property, energy efficient building retrofit property, or property installed pursuant to a qualified retrofit plan, such property shall meet the requirements of this subparagraph if— The requirements described in this subparagraph with respect to any property are that the taxpayer shall ensure that any laborers and mechanics employed by the taxpayer or any contractor or subcontractor in the installation of any property shall be paid wages at rates not less than the prevailing rates for construction, alteration, or repair of a similar character in the locality in which such property is located as most recently determined by the Secretary of Labor, in accordance with subchapter IV of chapter 31 of title 40, United States Code. Rules similar to the rules of section 45(b)(7)(B) shall apply. Rules similar to the rules of section 45(b)(8) shall apply. The Secretary shall issue such regulations or other guidance as the Secretary determines necessary to carry out the purposes of this subsection, including regulations or other guidance which provides for requirements for recordkeeping or information reporting for purposes of administering the requirements of this subsection. For purposes of this section— The term “energy efficient commercial building property” means property— which is installed on or in any building which is— which is installed as part of— The term “Reference Standard 90.1” means, with respect to any property, the more recent of— The Secretary, after consultation with the Secretary of Energy, shall promulgate regulations which describe in detail methods for calculating and verifying energy and power consumption and cost with respect to any property, based on the provisions of the most recent California Nonresidential Alternative Calculation Method Approval Manual which has been affirmed by the Secretary, after consultation with the Secretary of Energy, for purposes of this section not later than the date that is 4 years before the date such property is placed in service. Any calculation under paragraph (1) shall be prepared by qualified computer software. For purposes of this paragraph, the term “qualified computer software” means software— In the case of energy efficient commercial building property installed on or in property owned by a specified tax-exempt entity, the Secretary shall promulgate regulations or guidance to allow the allocation of the deduction to the person primarily responsible for designing the property in lieu of the owner of such property. Such person shall be treated as the taxpayer for purposes of this section. For purposes of this paragraph, the term “specified tax-exempt entity” means— Each certification required under this section shall include an explanation to the building owner regarding the energy efficiency features of the building and its projected annual energy costs as provided in the notice under paragraph (2)(B)(iii). The Secretary shall prescribe the manner and method for the making of certifications under this section. The Secretary shall include as part of the certification process procedures for inspection and testing by qualified individuals described in subparagraph (C) to ensure compliance of buildings with energy-savings plans and targets. Such procedures shall be comparable, given the difference between commercial and residential buildings, to the requirements in the Mortgage Industry National Accreditation Procedures for Home Energy Rating Systems. Individuals qualified to determine compliance shall be only those individuals who are recognized by an organization certified by the Secretary for such purposes. For purposes of this subtitle, if a deduction is allowed under this section with respect to any energy efficient commercial building property, the basis of such property shall be reduced by the amount of the deduction so allowed. In the case of a taxpayer which elects (at such time and in such manner as the Secretary may provide) the application of this subsection with respect to any qualified building, there shall be allowed as a deduction for the taxable year which includes the date of the qualifying final certification with respect to the qualified retrofit plan of such building, an amount equal to the lesser of— For purposes of this subsection, the term “qualified retrofit plan” means a written plan prepared by a qualified professional which specifies modifications to a building which, in the aggregate, are expected to reduce such building’s energy use intensity by 25 percent or more in comparison to the baseline energy use intensity of such building. Such plan shall provide for a qualified professional to— For purposes of this subsection, the term “energy efficient building retrofit property” means property— which is installed as part of— For purposes of this subsection, the term “qualified building” means any building which— For purposes of this subsection, the term “qualifying final certification” means, with respect to any qualified retrofit plan, the certification described in paragraph (2)(C) if the energy use intensity certified in such certification is not more than 75 percent of the baseline energy use intensity of the building. For purposes of this subsection, the term “baseline energy use intensity” means the energy use intensity certified under paragraph (2)(A), as adjusted to take into account weather. For purposes of subparagraph (A), the adjustments described in such subparagraph shall be determined in such manner as the Secretary may provide. For purposes of this subsection— The term “energy use intensity” means the annualized, measured site energy use intensity determined in accordance with such regulations or other guidance as the Secretary may provide and measured in British thermal units. The term “qualified professional” means an individual who is a licensed architect or a licensed engineer and meets such other requirements as the Secretary may provide. In the case of any building with respect to which an election is made under paragraph (1), the term “energy efficient commercial building property” shall not include any energy efficient building retrofit property with respect to which a deduction is allowable under this subsection. Except as provided in clause (ii), subsection (d) shall not apply for purposes of this subsection. Rules similar to subsection (d)(3) shall apply for purposes of this subsection. In the case of a taxable year beginning after 2022, each dollar amount in subsection (b) shall be increased by an amount equal to— The Secretary shall promulgate such regulations as necessary— This section shall not apply with respect to property the construction of which begins after June 30, 2026.