National Incentives for Energy Efficiency & Green Building

Section 179D provides a federal tax deduction for energy-efficient improvements to commercial buildings and multifamily buildings four stories or more. 179D was amended by the Inflation Reduction Act, offering significantly higher value and broader eligibility for taxable years 2023-2025. The One Big Beautiful Bill Act introduced a sunset provision stating that Section 179D will not apply to projects that begin construction after June 30, 2026.

The deduction is available to building owners who install qualifying energy-efficient systems in new or existing buildings. Also, design professionals primarily responsible for designing the eligible property placed in service may also claim the deduction.

• Base deduction: starts at $0.50 per sq. ft.
• Increases incrementally with greater energy savings
• Maximum of $5.00 per sq. ft. for projects meeting higher performance thresholds and labor requirements

• Commercial, Industrial, and Institutional buildings (all sectors)
• Multifamily buildings 4 stories or more
• Government-owned buildings (design professionals primarily responsible for designing the eligible property placed in service may claim the deduction)

Projects can qualify through efficiency gains in one or more of the following systems:

• Building Envelope
• HVAC and Hot Water Systems
• Interior Lighting

• New Construction: Minimum 25% overall energy savings relative to a baseline building per ASHRAE 90.1-2007
• Existing Buildings: Minimum 25% overall energy savings relative to the current building usage
• Additional savings above 25% increases deduction value
• Requires energy modeling and third-party certification
• Both whole-building and partial system upgrades may qualify, but must demonstrate 25% reduction in overall building energy usage.

The prior "interim lighting rule" has largely been replaced by updated performance-based requirements, though simplified pathways may still apply in certain retrofit scenarios.

To access the maximum $5.00/sf deduction, projects must meet:

• Prevailing wage standards
• Apprenticeship requirements

Projects that do not meet these criteria remain eligible at lower deduction levels.

179D can often be combined with:

• Certification programs
• State and local incentives

In many cases, the same modeling and verification used for certification program and state/local incentives can support 179D certification, improving overall project economics.

• Reducing upfront cost of high-performance building systems
• Improving ROI on energy efficiency investments
• Supporting Environmental, Social, and Governance (ESG) and decarbonization goals

ReVireo provides end-to-end support for Section 179D Incentives, including:

• Energy modeling and savings analysis
• Coordination with design and construction teams
• Documentation and certification for 179D compliance
• Integration with utility incentive programs

Reach out today to evaluate your eligibility and potential savings.

Fannie Mae and Freddie Mac each have programs incentivizing green building and energy efficiency for new or existing multi-family buildings. The programs offer pricing incentives, including reduced interest rates and enhanced loan proceeds.

Projects may qualify for these benefits by achieving recognized green building certifications (such as ENERGY STAR®, National Green Building Certification programs, or equivalent standards) or by demonstrating measurable improvements in energy and water performance.

Certifications can be earned during or after construction. While some certification pathways require substantial design and construction measures, others, particularly for existing buildings, can be achieved through benchmarking, operational improvements, and limited capital upgrades.

Separately, Fannie Mae and Freddie Mac also offer financing programs for existing properties that do not yet have a certification but commit to improvements. These programs provide preferential loan terms, including higher loan proceeds and better pricing, in exchange for achieving specified energy and water savings (commonly 15% or more), rather than requiring certification upfront.

Previously, the U.S. Department of Housing and Urban Development (HUD), through its Federal Housing Administration (FHA) multifamily loan programs, offered green financing incentives that included reduced Mortgage Insurance Premiums (MIPs) for qualifying projects meeting certain green building and energy-efficiency criteria, commonly referred to as the “Green MIP” program. In 2025, HUD finalized changes to its FHA multifamily MIP structure that standardized both upfront and annual MIP rates at 25 basis points (0.25%) across multifamily loan categories for applicable applications submitted on or after October 1, 2025. This update effectively eliminated the separate Green and Energy Efficient Housing MIP category, along with the associated requirements for green building certification, energy benchmarking, and ongoing energy performance reporting.