Energy Efficient Commercial Buildings Act of 2021
Bill: H.R.5181 | Sponsor: Rep. Blumenauer, Earl (D-OR)
Policy area: Taxation

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.

To amend the Internal Revenue Code of 1986 to provide temporarily 
 increase the deduction for energy efficient commercial buildings, and 
                          for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Energy Efficient Commercial 
Buildings Act of 2021''.

SEC. 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' for `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' for `2020',
                            ``(ii) by substituting `subsection 
                        (i)(3)(B)' for `subsection (b) or subsection 
                        (d)(1)(A)', and
                            ``(iii) by substituting `2021' for `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' 
                means--
                            ``(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' for `total annual energy and power 
                        costs' in subparagraph (B) thereof), or
                            ``(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' 
                means a written plan prepared by a qualified 
                professional which specifies modifications to a 
                building which, in the aggregate, are expected to 
                reduce such building's energy usage intensity by 25 
                percent or more in comparison to the baseline energy 
                usage intensity of such building. Such plan shall 
                provide for a qualified professional to--
                            ``(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' means 
                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' means any 
                building which--
                            ``(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' means, with respect to any qualified 
                retrofit plan, the certification described in 
                subparagraph (B)(iii) if the energy usage intensity 
                certified in such certification is not more than 75 
                percent of the baseline energy usage intensity of the 
                building.
                    ``(F) Baseline energy usage intensity.--
                            ``(i) In general.--The term `baseline 
                        energy usage intensity' means the energy usage 
                        intensity certified under subparagraph (B)(i), 
                        as adjusted to take into account weather as 
                        compared to the energy usage intensity 
                        determined under subparagraph (B)(iii)(I).
                            ``(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' means the site energy 
                        usage intensity determined in accordance with 
                        such regulations or other guidance as the 
                        Secretary may provide and measured in British 
                        thermal units.
                            ``(ii) Qualified professional.--The term 
                        `qualified professional' means an individual 
                        who is a licenced architect or a licenced 
                        engineer and meets such other requirements as 
                        the Secretary may provide.
                    ``(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' shall 
                        not include any energy efficient retrofit 
                        building property with respect to which a 
                        deduction is allowable under this paragraph.
                            ``(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) of the 
        Internal Revenue Code of 1986 (as added by this section), and 
        any other provision of such section solely for purposes of 
        applying such paragraph, shall apply to property placed in 
        service after December 31, 2021 (in taxable years ending after 
        such date) if such property is placed in service pursuant to 
        qualified retrofit plan (within the meaning of such section) 
        established after such date.
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