IRA’s 179D Deduction Gets Huge Makeover
The 179D commercial buildings energy efficiency tax deduction got a makeover under the new law with the potential for major financial benefits for facility managers and building owners. The deduction allows building owners to claim tax deductions for building upgrades that improve energy efficiency.
- Previously, the requirement to claim the deduction was to achieve 50% lower energy and power costs.
- Deduction limit of once over the lifetime of the building
- Deduction of $1.80 per square foot
- Now, the deduction includes a sliding scale approach, with the HVAC savings requirement being 15%.
- This deduction can be taken every three years for a building project.
- The deduction increased to a sliding scale rate of up to $5.00 per square foot.
- The IRA also broadened the eligibility for building projects to now include non-profits and Tribal governments.
The exact amount of the deduction depends on the total energy and power cost savings from energy efficiency improvements, as well as fulfilling labor and prevailing wage requirements.
Read a full summary of the bill here.
Will New Supply Chain Problems Force Out Small HVAC Contractors?
Kyle Gargaro, the Editorial Director of the ACHR News spoke with the CEO of a significant HVAC manufacturer who claimed that it is actually workers, not raw supplies, that are holding back the company’s production.
What does this entail for the HVAC contractor? When Matt Michel, president of Service Nation, appeared as a guest on a recent ACHR NEWS podcast, he offered some advice for contractors.
“They need to grow,” Michel said about contractors. Specifically, the smaller contractors.
The industry veteran went on to say that he has heard that manufacturers are starting to communicate with contractors. The discussions are centered on how they believe the supply chain problems will tighten up once again, there will be some shortages, and they are likely to cut off small contractors. They claim that by the end of 2023, many HVAC contractors making less than $1 million a year will be out of business, at least in terms of product changeout, simply because they can’t get product.
Read the full article here.
Senate Ratifies Kigali Amendment
Segments of the HVACR industry are hailing the ratification of the Kigali Amendment, an international agreement to cut the production of refrigerants that are a major contributor to global warming when they escape into the atmosphere.
The move is expected to create 33,000 U.S. manufacturing jobs and $4.8 billion in annual exports of air-conditioning and refrigeration products. The Kigali Amendment, already agreed to by more than 130 other countries, was ratified by the U.S. Senate on a bipartisan vote, 69-27, on September 21.
While the U.S. was already moving toward reducing HFC use under the American Innovation and Manufacturing Act of 2020, with phasedown regulations expected from the Environmental Protection Agency next year, the ratification vote lends weight to the worldwide effort to cut HFC use.
Read the full article here.