A newly signed federal tax law is reshaping business tax planning and putting a clock on energy-efficiency incentives for commercial buildings. If you’re planning HVAC upgrades or other capital improvements in 2025 or 2026, now is the time to act. The Section 179D commercial HVAC tax deduction—a significant incentive for energy-efficient building projects—is approaching its sunset date, making planning critical to secure savings and maximize ROI.
What’s Changing?
The updated law delivers long-term tax relief for businesses, including expanded deductions for equipment and tools, but it also sets a firm expiration date for the Section 179D commercial HVAC tax deduction. This long-standing program has helped building owners offset the cost of energy-efficient HVAC systems, lighting, and building envelope improvements that meet specific performance standards.
Key deadline: Projects must begin construction before July 1, 2026 to qualify for the Section 179D deduction.
This timeline has major implications for facilities managers and business owners planning upgrades. From equipment lead times to engineering and permitting, waiting until late 2025 to begin planning could mean missing out on thousands in potential deductions.
What This Means for You
Whether you’re planning infrastructure upgrades, budgeting for deferred maintenance, or preparing to modernize aging HVAC systems, the timeline for your project matters.
At LC Anderson, we help facilities teams:
- Identify eligibility for 179D deductions
- Create HVAC upgrade plans that align with energy savings and incentive deadlines
- Coordinate documentation and timelines to ensure compliance
Why 2025 Projects Are Critical
To capture available incentives:
- Projects must begin construction before July 1, 2026
- Energy performance standards must be met and documented
- Design and installation must be properly planned in advance
Given lead times for equipment, engineering, permitting, and internal approvals, now is the time to begin evaluating and planning your 2025 projects.
Additional Business Tax Benefits
In addition to the 179D phase-out, the new law includes permanent tax relief for business owners—making 2025 a strategic time to invest in your facility:
- Section 199A: 20% deduction for qualified business income is now permanent
- 100% Bonus Depreciation: Returns for HVAC equipment, tools, and vehicles placed in service after January 19, 2025
- Expanded Section 179: Expensing limit increases to $2.5 million
These changes allow for more predictable budgeting and long-term capital planning.
Let’s Talk About Your 2025 and 2026 Plans
If HVAC upgrades are on the horizon, we can help you:
- Evaluate current system performance
- Identify cost-saving opportunities
- Develop a strategic plan that maximizes value and meets incentive deadlines
Reach out now to schedule a system assessment or energy optimization consultation.
Contact us today to put a plan in place and make the most of the remaining commercial tax incentives.
