New Tax Law Requires Further Congressional Action to Extend Energy Efficiency Credits

New Tax Law Requires Further Congressional Action to Extend Energy Efficiency Credits

NEMA supported the Tax Cut and Jobs Act (H.R. 1) because it reduced the corporate tax rate and provided 100 percent expensing for qualified improvement property (QIP) for buildings and facilities, which supports energy-efficiency investments and upgrades. However, due to a drafting error in the legislative text, H.R. 1 does not clearly define QIP technologies, which prevents potential customers from using this provision.  This error has a ripple effect on building owners, their suppliers and contractors who had been planning new energy efficient technology investments and building upgrades.  Fixing this language should be a top priority of Congress and the energy-efficiency community.   While businesses move forward with adoption of H.R. 1 and await new tax regulations, NEMA continues to press lawmakers for further action.


Recently the House Ways and Means Committee held a hearing to address the temporary tax provisions, often referred to as tax extenders, that expired in either 2017 or will expire at the end of 2018—many of which are energy-related.  More specifically, lawmakers were addressing which tax extenders, if any, would continue under the new law.  Of particular interest to NEMA Members are the provisions for the commercial buildings energy efficiency deduction (179D) and the alternative-fuel vehicle refueling property, such as electric vehicle charging stations.

During the hearing, NEMA recommended that Congress fix the QIP drafting error and reinstate the building energy-efficiency tax credit (Section 179D) for at least 2018 as well as utilize the five-year, 100 percent depreciation provisions in H.R. 1 as a transition to a permanent, performance-based, technology-neutral  tax incentive that phases out based on market conditions. Both policy solutions are possible, as long as the energy-efficiency community unites to support one approach that resolves the current uncertainty surrounding existing energy efficiency tax incentives.

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