IRS Announcement 2024-24: Updated Reference Standard 90.1 for § 179D
Announcement 2024-24 refers to the upcoming updates that will align the § 179D tax deduction with ASHRAE 90.1-2022. Energy Efficient Commercial Building Property (as defined under Section 179D of the Internal Revenue Code) placed in service after December 31, 2028, as defined under Section 179D of the Internal Revenue Code will use ASHRAE 90.1-2022 as the reference standard.
Section 179D provides tax deductions for energy-efficient commercial building property. The deduction is based on achieving energy savings relative to a reference building that meets the minimum requirements of the ASHRAE 90.1 standard.
Date Placed In Service
Before 1/1/2015
After 12/31/2014 and before 1/1/2027
After 12/31/2026 and before 1/1/2029*
After 12/31/2028*
Applicable Reference Standard 90.1
Reference Standard 90.1-2001
Reference Standard 90.1-2007
Reference Standard 90.1-2019
Reference Standard 90.1-2022
*Taxpayers who begin construction before 1/1/2023 may apply Reference Standard 90.1-2007 regardless of when the building is placed in service.
Implications for Section 179D
Stricter Baseline: With the new ASHRAE 90.1-2022 standards, the baseline for energy efficiency will be higher, potentially requiring proper design planning, to qualify for the 179D deduction. Source Advisors can assist with preliminary energy modeling and provide guidance to qualify a project for the maximum available deduction.
Incentive for Innovation: The updates encourage the adoption of cutting-edge technologies and practices to meet the new efficiency standards, driving innovation in the building industry.
