The One Big Beautiful Bill Act (OBBBA) phases out several federal energy tax incentives, including the Section 45L New Energy Efficient Home Credit and the Section 179D Energy Efficient Commercial Buildings Deduction. Both remain available for a limited time. Contractors, builders, and building owners should understand the deadlines now so they don’t miss out on qualifying projects.
But the deadlines aren’t the end of the story. ACCA is still advocating for HVACR contractors in Washington and beyond, urging Congress to restore these incentives before they lapse for good. Add your voice and tell your elected officials why 45L and 179D matter to our industry.
TAKE ACTION
Section 45L: builders must acquire homes by June 30
The Section 45L credit will no longer apply to homes acquired after June 30, 2026. For builders and developers, starting construction before the deadline is not enough. IRS ties eligibility to when the builder acquires the home, so the builder must complete and acquire the home, with certification in hand, on or before the deadline. Projects still under construction, awaiting certification, or not yet closed by that date generally will not qualify.
That makes scheduling and coordination critical for HVACR contractors working with homebuilders. Delays tied to equipment availability, inspections, permitting, commissioning, or final occupancy could all affect whether a builder qualifies.
Section 179D: construction must start by June 30
The Section 179D deduction follows a different timeline. Under OBBBA, it will no longer apply to projects where construction begins after June 30, 2026. Unlike 45L, these projects don’t need to be finished by that date. Eligibility depends on whether construction has officially started before the deadline.
IRS has long recognized two ways to establish that construction has begun: the Physical Work Test and the Five Percent Safe Harbor. Under the Physical Work Test, construction begins when significant physical work starts, such as foundation work, installation of building systems, or certain off-site manufacturing of custom equipment. Planning, design, engineering, permitting, financing, and contract execution don’t count on their own. Under the Five Percent Safe Harbor, a project qualifies if the team has incurred at least five percent of total project costs before the deadline. These standards offer the clearest signal of how the IRS may evaluate eligibility.
Documentation matters here. Contractors, building owners, and project teams should keep records of construction activities, equipment purchases, contracts, invoices, and other milestones that help demonstrate compliance.
Plan ahead before the window closes
The window for both incentives is closing fast. Builders pursuing 45L should focus on completing and acquiring homes before June 30. Commercial teams pursuing 179D should confirm whether their projects can meet the begin-construction requirements by the same date.
ACCA will continue monitoring IRS guidance and share updates as the agency clarifies how these changes take effect.
Help restore these important incentives
Losing 45L and 179D doesn’t have to be permanent. Along with the previously eliminated 25C and 25D incentives, these provisions helped lower costs, promote energy independence, and drive demand for high-efficiency HVACR systems. Without them, energy-efficient projects and upgrades may become less affordable for consumers and building owners, creating uncertainty for contractors and potentially slowing investment in high-performance equipment.
ACCA is urging Congress to restore these incentives. Take a moment to participate in our ACTion Alert and tell your elected officials why these programs matter to our industry.
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