179D Tax Deduction: What Every U.S. Architect and Engineer Should Know in 2025

The demand for energy-efficient buildings has never been higher, and with new legislation expanding tax incentives, architects and engineers across the U.S. are in a unique position to benefit. One of the most valuable tools available today is the 179D Tax Deduction. Updated in recent years through the Inflation Reduction Act, this provision offers lucrative opportunities for design professionals who play a role in making buildings more energy-efficient.

At Concord Energy Strategies, we specialize in helping firms understand and maximize programs like the Section 179D Tax Deduction, as well as incentives tied to renewable electricity and clean hydrogen production. Here’s what you need to know heading into 2025.

What Is the 179D Tax Deduction?

The Section 179D Tax Deduction is a federal incentive designed to encourage energy-efficient commercial and government building projects. It allows building owners — and, importantly, architects and engineers who design qualifying systems — to claim significant tax savings for improving energy efficiency in:

·        Lighting systems

·        HVAC and hot water systems

·        Building envelope upgrades

As of 2025, qualified professionals can claim deductions of up to $5.65 per square foot, depending on the level of efficiency improvements. That means the bigger the building and the better the efficiency, the larger the reward.

Why Architects and Engineers Should Pay Attention

Unlike many tax credits that only apply to building owners, the 179D deduction extends to designers of government-owned projects. That includes architects, engineers, and design-build contractors who contribute to reducing a building’s energy footprint.

For example, if you’ve worked on schools, courthouses, municipal buildings, or other publicly owned facilities, you may be eligible. In many cases, the government entity will allocate the deduction to the design professional responsible for the qualifying improvements.

This can translate into tens or even hundreds of thousands of dollars in tax savings — revenue that can be reinvested back into your firm.

What’s New in 2025?

The Inflation Reduction Act expanded and enhanced the 179D program, and 2025 is a key year for design professionals to take advantage:

·  Higher deduction amounts: The maximum per-square-foot benefit has increased, providing larger rewards for high-performance designs.

·  Prevailing wage and apprenticeship requirements: Meeting these labor standards can unlock the full value of the deduction.

·  Stronger emphasis on sustainability: With federal initiatives pushing for carbon neutrality, projects that integrate renewable electricity and clean hydrogen systems may open doors to stacked incentives.

This makes partnering with a Renewable Electricity Production Credit Expert or Clean Hydrogen Production Tax Credit Expert especially valuable when planning projects.

How to Claim the 179D Deduction

Successfully claiming the Section 179D Tax Deduction requires more than simply submitting a tax form. Here’s the general process:

· Energy modeling: Independent energy modeling must confirm the building meets required efficiency thresholds.

·  Third-party certification: A qualified engineer or contractor must certify the savings.

·  Allocation letter: For government projects, the public entity must allocate the deduction to the designer.

·  Tax filing: Documentation is submitted alongside your tax return.

Because the process is technical, many firms work with specialists like Concord Energy Strategies to navigate certification, compliance, and tax optimization.

Why Work with Concord Energy Strategies

As a nationwide leader in energy tax incentives, Concord Energy Strategies helps architects and engineers unlock every available credit and deduction. Our expertise goes beyond 179D — we are also recognized as trusted Renewable Electricity Production Credit Experts and Clean Hydrogen Production Tax Credit Experts.

Whether you’re designing a new government building, upgrading an HVAC system, or integrating renewable energy solutions, our team ensures you don’t leave money on the table.

Final Thoughts

In 2025, the 179D Tax Deduction remains one of the most powerful financial incentives for U.S. architects and engineers committed to energy-efficient design. By staying informed and working with experienced partners, you can not only reduce tax liability but also position your firm as a leader in sustainable design.

If you’re ready to explore how many your projects could qualify for, contact Concord Energy Strategies today — and let’s turn your innovation into tangible financial savings.