Energy Efficient Commercial Buildings Act of 2021

To amend the Internal Revenue Code of 1986 to provide temporarily increase the deduction for energy efficient commercial buildings, and for other purposes. 1. Short title This Act may be cited as the Energy Efficient Commercial Buildings Act of 2021 2. Energy efficient commercial buildings deduction (a) Temporary increase in deduction, etc Section 179D is amended by adding at the end the following: (i) Temporary rules (1) Period of application The provisions of this subsection shall apply only to taxable years beginning after December 31, 2021, and before January 1, 2032. (2) Modification of efficiency standard Subsection (c)(1)(D) shall be applied by substituting 25 50 (3) Maximum amount of deduction (A) In general The deduction under subsection (a) with respect to any building for any taxable year shall not exceed the excess (if any) of— (i) the product of— (I) the applicable dollar value, and (II) the square footage of the building, over (ii) the aggregate amount of the deductions under subsection (a) and paragraph (6) with respect to the building for the 3 taxable years immediately preceding such taxable year (or, in the case of any such deduction allowable to a person other than the taxpayer, for any taxable year ending during the 4-taxable-year period ending with such taxable year). (B) Applicable dollar value For purposes of paragraph (3)(A)(i), the applicable dollar value shall be an amount equal to $2.50 increased (but not above $5.00) by $0.10 for each percentage point by which the total annual energy and power costs for the building are certified to be reduced by a percentage greater than 25 percent. (C) Application of inflation adjustment Subsection (g) shall be applied— (i) by substituting 2022 2020 (ii) by substituting subsection (i)(3)(B) subsection (b) or subsection (d)(1)(A) (iii) by substituting 2021 2019 (D) Limitation to apply in lieu of current limitation and partial allowance Subsections (b) and (d)(1) shall not apply. (4) Allocation of deduction by certain tax-exempt entities (A) In general A specified tax-exempt entity shall be treated in the same manner as a Federal, State, or local government for purposes of applying subsection (d)(4). (B) Specified tax-exempt entity For purposes of this paragraph, the term specified tax-exempt entity (i) the United States, any State or political subdivision thereof, any possession of the United States, or any agency or instrumentality of any of the foregoing, (ii) any Indian tribal government (within the meaning of section 139E), and (iii) any organization exempt from tax imposed by this chapter. (5) Alternative deduction for energy efficient retrofit building property (A) In general In the case of a taxpayer which elects (at such time and in such manner as the Secretary may provide) the application of this paragraph with respect to any qualified building, there shall be allowed as a deduction for the taxable year which includes the date of the qualifying final certification with respect to the qualified retrofit plan of such building, an amount equal to the lesser of— (i) the excess described in paragraph (3) (determined by substituting energy usage intensity total annual energy and power costs (ii) the aggregate adjusted basis (determined after taking into account all adjustments with respect to such taxable year other than the reduction under subsection (e)) of energy efficient retrofit building property placed in service by the taxpayer pursuant to such qualified retrofit plan. (B) Qualified retrofit plan For purposes of this paragraph, the term qualified retrofit plan (i) as of any date during the 1-year period ending on the date of the first certification described in clause (ii), certify the energy usage intensity of such building as of such date, (ii) certify the status of property installed pursuant to such plan as meeting the requirements of clauses (ii) and (iii) subparagraph (C), and (iii) as of any date that is more than 1 year after completion of the plan, certify the energy usage intensity of such building as of such date. (C) Energy efficient retrofit building property For purposes of this paragraph, the term energy efficient retrofit building property (i) with respect to which depreciation (or amortization in lieu of depreciation) is allowable, (ii) which is installed on or in any qualified building, (iii) which is installed as part of— (I) the interior lighting systems, (II) the heating, cooling, ventilation, and hot water systems, or (III) the building envelope, and (iv) which is certified in accordance with subparagraph (B)(ii) as meeting the requirements of clauses (ii) and (iii). (D) Qualified building For purposes of this paragraph, the term qualified building (i) is located in the United States, and (ii) was originally placed in service not less than 5 years before the establishment of the qualified retrofit plan with respect to such building. (E) Qualifying final certification For purposes of this paragraph, the term qualifying final certification (F) Baseline energy usage intensity (i) In general The term baseline energy usage intensity (ii) Determination of adjustment For purposes of clause (i), the adjustments described in such clause shall be determined in such manner as the Secretary, after consultation with the Administrator of the Environmental Protection Agency, may provide. (G) Other definitions For purposes of this paragraph— (i) Energy usage intensity The term energy usage intensity (ii) Qualified professional The term qualified professional (H) Coordination with deduction otherwise allowed under subsection (a) (i) In general In the case of any building with respect to which an election is made under subparagraph (A), the term energy efficient commercial building property (ii) Certain rules not applicable (I) In general Except as provided in subclause (II), subsection (d) shall not apply for purposes of this paragraph. (II) Allocation of deduction by certain tax-exempt entities Rules similar to subsection (d)(4) (determined after application of paragraph (5)) shall apply for purposes of this paragraph. . (b) Effective date (1) In general Except as otherwise provided in this subsection, the amendment made by this section shall apply to taxable years beginning after December 31, 2021. (2) Alternative deduction for energy efficient retrofit building property Paragraph (6) of section 179D(i)

Summary: Energy Efficient Commercial Buildings Act of 2021 This bill temporarily modifies the tax deduction for energy efficient commercial buildings for taxable years beginning after December 31, 2021, and before January 1, 2032. Among other provisions, the bill provides for a lower (25%) reduction of annual energy and power costs for certain energy systems, revises the maximum amount of the deduction, and allows an alternative deduction for costs relating to energy efficient retrofit building property.