LED Light Tax Deductions for Businesses

led light tax deductions for businesses

These days, just about everyone is doing their part to help protect the environment we live in. People are “going green” by saving energy, driving hybrid cars, carpooling, recycling, and conserving water. 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.

There is a growing trend among small businesses to become more environmentally friendly. One way they are doing this is by adding LED lighting to their facilities. Doing so enables small business owners to take advantage of some generous tax deductions. This Balboa Capital blog post discusses LED light tax deductions for businesses.

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 used in your business offices by at least 25%. If you 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 actual 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 also 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 special tax provision, you can purchase or finance qualifying equipment and then take a nice tax deduction on it during the same year.

At Balboa Capital, we stay on top of the latest news and information regarding Section 179 and update our website accordingly. Ensure that you consult with your tax professional before purchasing LED lighting to see if your commercial building qualifies for the Section 179D deduction.

The information in this blog post has been prepared for informational purposes only. It is not intended to provide and should not be relied on for tax, legal, investment, or accounting advice. You should consult with your accountant, lawyer, or tax advisor before making any business decisions or moving forward with business funding.