LED Light Tax Deductions for Businesses

led light tax deductions for businesses

These days, just about everyone is doing his or her part to help protect the environment we live in. People are “going green” by recycling, saving energy, driving hybrid cars, carpooling, conserving water and eating sustainable foods. In addition, they are not alone. Commercial buildings, apartment complexes, supermarkets, warehouses, hotels and more are also taking the necessary steps to conserve resources and reduce their carbon footprint.

In fact, there is a growing trend among businesses to become more environmentally friendly. One way they are doing this is by adding LED lighting to their facilities. In fact, doing so enables businesses to take advantage of the Section 179D LED light tax deductions for businesses, which is the focus of this Balboa Capital blog post.

Go green, deduct green.

Section 179D was added as part of the Energy Policy Act. It lets businesses take a tax deduction for the cost of installing energy-efficient LED lighting systems. Your lights need to reduce the overall energy that is used in your business offices by at least 25%. If you are making the switch to LED lights for a warehouse, they must reduce the energy by at least 50%.

Once you purchase an LED lighting system from an equipment vendor and have it installed, you will need to schedule an inspection from an engineer, contractor or lighting professional to measure and certify your true energy savings using special computer software. Under the current Section 179D provision, your business can deduct up to $1.80 per square foot if your new LED lighting system reduces energy and power costs by 50% or more. There is an alternate deduction of $0.60 per square foot for a 25-40% reduction in energy and power costs.

We know Section 179.

Balboa Capital knows quite a bit about Section 179. Many of our customers who finance capital equipment put Section 179 to work for their businesses. With this unique tax provision, you can purchase or finance qualifying equipment, and then take a nice tax deduction on it during the same year.

Here at Balboa Capital, we stay on top of the latest news and information regarding Section 179 and update our website accordingly. Make sure that you consult with your tax professional prior to making an LED lighting purchase to see if you are commercial building qualifies for the Section 179D deduction.