Given the tenuous state of many corporate balance sheets these days, companies are looking anywhere and everywhere to reduce operating costs.  Those looking to save a buck need look no further than the lighting above their desks.  Lighting upgrades have the potential to significantly reduce overall energy costs and, for a limited time, until December 31, 2013, capital expenditures on lighting upgrades can be eligible for the Commercial Building Tax Deduction (CBTD) if they meet the criteria.

So, what is the CBTD? The CBTD is a special financial incentive originally created by the Energy Policy Act of 2005 (EPACT) and designed to reduce the initial cost of investing in energy-efficient lighting and other building systems via an accelerated deprecation tax deduction. It was created to encourage national energy savings and security by increasing the financial attractiveness for building owners (and tenants – must own the new lighting system) to upgrade lighting and other building technologies.

This special tax deduction allows building owners (or tenants) to write off a large portion if not 100 percent of the cost of upgrading a building’s indoor lighting in the year the new equipment is placed in service.  The deduction is capped at $0.60/sq.ft. or the actual cost, whichever is less.  The CBTD expiration date has been extended twice, most recently by the Energy Independence and Security Act of 2007. With this extension, the CBTD can be claimed for qualifying projects completed by December 31, 2013.

Buildings eligible to apply for the CBTD include, but are not limited to, offices, retail establishments, municipal buildings, schools and universities, hospitals and healthcare facilities, manufacturing facilities, and warehouses.  To qualify for the CBTD, the project must be certified to reduce interior lighting power density by 25-40% below the maximum allowances published in ASHRAE/IESNA 90.1-2001, while meeting other requirements related to controls and light levels.

For more details on what buildings and projects may be eligible and how to qualify for the CBTD, please visit the Commercial Lighting Tax Deduction and enLIGHTen America websites. For a list of EPACT 2005 qualified certifiers visit the National Lighting Bureau website.


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