Key Takeaways:

• The section §179D deduction is no longer a tax extender; it is now a permanent part of the
  Internal Revenue Code.
• Starting in 2021, both the maximum section §179D deduction of $1.80 per square foot and the partial deduction of $0.60 per square foot are indexed for inflation. This adjustment uses the
  C-CPI-U, just like the tax brackets under Code section 1, except that the base year is 2019.
  The adjustment is rounded to the nearest cent.
• The ASHRAE standard and the California Nonresidential Alternative Calculation Method
  Approval Manual are now set to update without Congressional intervention. The Secretary of
  the Treasury, in consultation with the Secretary of Energy, will affirm the updated standards
  for use under Code section §179D. Though the statutory text is not absolutely clear, it appears
  that the reference standard for any property cannot be newer than the standard from two
  years prior to the beginning of construction for the building. For example, if construction
  begins in 2021, the building may be required to use the ASHRAE 90.1-2019 standard instead
  of the standard from 2007.
• The updated baseline standards encourage building owners and designers to focus on improving the energy efficiency of buildings to qualify for the deduction. We will keep you
  apprised of any developments or new challenges as taxpayers adjust to the new rolling
  energy standards.
• These changes apply to property placed in service after December 31, 2020.
• The Code section §45L credit for energy efficient homes receives a one-year extension through December 31, 2021. The extension applies to homes acquired after December 31, 2020. The
  eligible contractor may claim a $2,000 tax credit for each dwelling unit that is leased or sold
  for use as a residence during the taxable year.