State of Change
Navigating the Change in Environmental Design / Development
Inflation Reduction Act; The Spending Bill Of Our Time
In a rare bipartisan moment, the US Congress made one of two public determinations:
- Protecting the environment is a key priority; and / or
- Security of limited resources is a key priority
It then enshrined this position in a law referred to as the Inflation Reduction Act of 2022, see here, which is the biggest government program of our time.
The Inflation Reduction Act (“IRA”) directs $737 billion in spending, largely earmarked for energy efficient design. Much of this is available for building design and construction firms.
The Power of Design
There are new & greatly enhanced financial tools for those who actually create the efficient systems promoted by these laws.
ENERGY EFFICIENT COMMERCIAL BUILDING DEDUCTION
A powerful and transferable tax deduction that ranges up to $5 per square foot.
ENERGY CREDIT
A broad tax credit which can return up to 70% of the cost of qualified energy property investment.
CLEAN ENERGY CREDIT
A more targeted version of the Energy Credit specific to certain renewable energies.
CLEAN ENERGY PRODUCTION CREDIT
A long-term production incentive with a base-rate maximum of 1.5¢ per kWh.
MACRS
A mechanism which greatly accelerates depreciation on, or instantly expenses, the costs of qualified wind and solar assets.
R&D CREDIT
A potent and flexible credit that gives extra yields for energy asset design and university collaboration.
IRA In Action
These incentives benefit all parties:
- Better design. Owners / operators taking these incentives will be far more efficient.
- Financial advantage. Designers can ensure that their clients successfully take the credits and deductions that are open to them.
- Assignments. The designer is positioned to assign the credits and deduction to relevant parties.
- Facilitation of other parties. Designers can provide the documents and support that other parties need to capture benefits.
See this real-world example:
A Single Example
Take this hypothetical: an EECBD deduction for a LEED Gold building; 149,653 square feet.
149,653 sf X $5 psf deduction = $748,265 deduction*
That single deduction eliminates nearly $750K of taxable income. At this rate, the IRA suite of incentives is potentially more powerful than any/all other tax incentives open to a designer.
When developed for a non-profit, like here, this is transferred to the designer.
See The EECBD In Action
Click here for more detail on how these incentives can benefit your practice.
Incredible Potential
We have the skills and capabilities to provide several IRA options.
