Section 179D – Specified Tax-Exempt Entities Should Thank the GSA and the DOE.
- James Peacock
- Apr 15
- 3 min read
This article was first released on LinkedIn
Founder J Peacock Cost Seg Advisors, LLC
October 24, 2025
The 179D deduction is not gone yet, and will be around for a while.
I have noticed that the chatter on LinkedIn for Section 179D has subsided a bit. That is just a dang shame. There are so many avenues and opportunities yet to explore in this issue. One area is the “Specified” Tax-Exempt building owner as described in Sect 179D(d)(3)(B) and added in 2022 by the Inflation Reduction Act.
A quick background to anyone new to this tax issue; there is a deduction that can be claimed for energy efficient commercial building property (EECBP) or Energy Efficient Building Retrofit Property (EEBRP) that can be allocated to the designer of the property - if the building is owned by a tax-exempt organization. The IRS has set a procedure the taxpayer must follow in order to claim this deduction. See this IRS webpage for more information.
Not only private building owners are allowed to take advantage of the Section 179D deduction, now available for up to $5.81 per square foot of the building project (if all requirements are met), but it was expanded to include virtually all tax-exempt organizations that own or lease commercial buildings in the US and its territories.
The entities covered now include:
1. U.S. federal, state, local, or territorial government, or any organization they control.
2. Indian or Alaska Native Corporation and
3. Any US Tax-exempt organization
Since this deduction was opened up to all types of tax-exempt entity-owned properties, do these new participants understand their role in the allocation of this deduction to the property designers? Some information is publicly available, but as with anything else, you need to know the proper names or terms to use.
From my experience during the period when only government-owned buildings qualified for the 179D deduction, many government entities were unfortunately unfamiliar with their roles and responsibilities in properly allocating the deduction to the eligible designer.
GSA and DOE Published Guidance
My main go-to in this situation was the example the General Service Administration (the GSA) had for the buildings they managed. Other federal military organizations, some universities, and some local governments had established processes for the 179D allocation, you may want to research if your institution has any. However, the GSA was the one that fit most public buildings we encountered.
Many years ago, the GSA in its wisdom, came up with a process — complete with a pre-drafted Letter of Intent and an allocation letter — that I am sure saved government staff many headaches. With all the contractors, subcontractors, suppliers, architects, and engineers swarming a big government project, without some organization it could’ve turned into pure documentation chaos! Their information is a good model to follow.
Here is their page including links to the paperwork:
Also, the Department of Energy (DOE) has worked very hard to get the word out and make the issue much easier for the public to digest. Here is the DOE webpage:
And here is the DOE Portal they recently developed to give a building owner an idea if the deduction was feasible for them:
NOTE on Portal: “Any information generated by the 179D Portal is solely for the purpose of creating an estimate and cannot be relied upon to establish any requirement of section 179D, or for any purpose in claiming the 179D deduction.”
To all the GSA and DOE folks and other federal, state and local government entity persons that coordinated and produced their own guidance on the proper allocation of the Section 179D deduction to the rightful designers of the Energy Efficient Commercial building Property; I thank you, the IRS thanks you, the new tax-exempt businesses that can allocate this deduction, and I’m pretty sure everyone whose workload you lightened thanks you too.
If you have any questions, contact me via LinkedIn and we can set up a call.
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