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Lighting Tax Deduction. The Energy Efficient Commercial Buildings Tax Deduction. EPAct 2005’s Commercial Buildings Deduction provides the entire cost of energy-efficient interior lighting to be deducted in the year it is placed in service, subject to a cap.

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Lighting tax deduction

Lighting Tax Deduction

The Energy Efficient Commercial Buildings Tax Deduction


Lighting tax deduction

EPAct 2005’s Commercial Buildings Deduction provides the entire cost of energy-efficient interior lighting to be deducted in the year it is placed in service, subject to a cap.

This Deduction is achievable using commercially available lighting technologies and good lighting practice aimed at exceeding the national energy standard.The owner claims the Deduction using standard tax forms.


Lighting tax deduction

To earn the accelerated tax deduction, the objective is to increase efficiency beyond today’s energy standard.

  • All buildings except warehouses must achieve lighting power density at least 25-40% lower than ASHRAE/IES Standard 90.1-2001

  • Warehouses must having lighting power density at least 50% lower


Lighting tax deduction

For all buildings except warehouses, the Interim Lighting Rules offer an accelerated tax deduction that is the lesser of:

  • The complete cost of installing energy-efficient interior lighting

  • $0.30 to $0.60/sq.ft. proportional to lighting power savings of 25-40%


Lighting tax deduction

For warehouses, the Interim Lighting Rules offer an accelerated tax deduction that is the lesser of:

  • The complete cost of installing energy-efficient interior lighting

  • $0.60/sq.ft.


Lighting tax deduction

Lighting power savings are based on exceeding the minimum requirements of ASHRAE/IES 90.1-2001, the standard energy code.

  • Ties tax deduction to standard lighting practice

  • Objective is to reduce power below minimum requirements

  • Mandatory controls provisions of Standard must be met, increasing efficiency


Lighting tax deduction

  • Lighting must be interior lighting requirements of ASHRAE/IES 90.1-2001, the standard energy code.

  • Building must be located in United States or its territories

  • Cost must be otherwise depreciable

  • Project must be within scope of ASHRAE/IES 90.1 Standard

  • Project must be certified to reduce lighting power density by 25-40% below Standard 901.-2001


Lighting tax deduction


Lighting tax deduction

The effective timeframe of this provision is January 1, 2006 through December 31, 2007, although Congress may extend it.


Lighting tax deduction

Many technologies can be used to achieve the efficiency targets, such as:

  • T8 lamps + Super T8 lamps

  • High-efficiency electronic ballasts

  • Indirect lighting

  • High-efficiency fixtures

  • Low-wattage metal halide lamps

  • Compact fluorescent

  • T8 and T5HO hi-bay fixtures


Lighting tax deduction

Many technologies can be used to achieve the controls requirements, such as:

  • Occupancy sensors

  • Lighting automation panels

  • Building automation systems

  • Photosensors (bi-level switching)

  • Manual switches (bi-level switching)


Lighting tax deduction1

Lighting Tax Deduction requirements, such as:

The Energy Efficient Commercial Buildings Tax Deduction