4 energy tax incentives A&E firms should take advantage of right now
As an architect or leader at an architecture and engineering (A&E) firm, your time is too valuable to spend navigating clean energy tax incentives. And your industry partners likely feel the same.
But whatever ends up happening in Congress with clean energy, 2025 is the year you need to take advantage of energy tax credits, rebates and deductions. So having a working knowledge of major clean energy tax incentives could determine whether your next big project moves forward.
Clean energy tax incentives in action
Consider the following scenario. Your client, a school, wants to do a renovation that includes replacing its aging heating system with geothermal heat pumps.
This new system would be better for the environment, less expensive to operate in the long run and fit the values of the school community. But there’s a hitch: It costs $1 million to install — twice as much as a new furnace or boiler system.
When you explain the cost difference to school administrators, they tell you that the school can’t swing the extra $500,000. The whole project is in danger of stalling until the school can raise additional funds.
But then you realize that your client is likely eligible for a clean electricity investment tax credit (known as a Section 48 and 48E). This credit could bring the bill for the geothermal system down to $400,000 by covering up to 60% of the cost.
Thrilled, school leaders greenlight the project within weeks. And your firm begins to build a reputation as an innovator in the energy efficiency space.
This is just one example of how tax incentives can deliver results for architecture and engineering firms. The right tax incentive can help A&Es solve challenges like raising capital, finding development partners or making a project profitable enough to approve.
4 green energy tax incentives A&E firms need to know
There are dozens of clean energy tax incentives tucked into federal and state tax codes. But here are four big ones that you will regularly be able to use to make projects happen:
1. Section 179D: Energy Efficient Commercial Buildings Deduction
The Energy Efficient Commercial Buildings Deduction is designed to make new construction more energy efficient or encourage building owners to retrofit existing properties. If you can reduce a commercial building’s energy costs by 25% to 50% against a baseline, the building owner will likely qualify for this tax deduction.
While achieving such energy cost reductions may seem daunting or expensive, it’s important to know that the benchmark is based on a 2007 ASHRAE standard. (This will change to 2017 down the road.)
This means that any structure that already meets current building codes will often qualify automatically — all you need to do is have the building certified by a qualified professional (like Wipfli) to help ensure you meet all necessary standards.
2. Section 48E: Clean Electricity Investment Credit
The Clean Electricity Investment Credit is a tax credit aimed at promoting the growth of renewable energy sources like solar, wind or geothermal. As an architect, you’re likely excited to integrate innovative renewable systems into your designs, yet you often face the challenge of their higher costs.
Section 48E can help a lot here. That geothermal heating system discussed above? It would be paid for under this credit — as could over a dozen other systems that meet program requirements.
If you’re trying to make sustainable buildings more financially viable, Section 48E can be a fantastic tool. In some cases, the credit may even bring costs below what you could expect to pay for more traditional, dirtier systems.
(Note that Section 48E replaced the earlier Section 48 Energy Investment Tax Credit at the end of 2024.)
3. Section 30C: Alternative Fuel Vehicle Refueling Property Credit
The Alternative Fuel Vehicle Refueling Property Credit makes investing in recharging equipment for electric vehicles more cost-effective, so long as you’re building inside a qualifying low-income zone.
Section 30C is aimed in part at spurring development of new dedicated electric vehicle recharging stations. But it can also apply to installing recharging equipment in other qualified locations.
Consider the possibility that by simply adding recharging equipment to the parking area of a planned commercial development, you could help a client qualify for the credit.
Section 30C is also not exclusively limited to electric vehicles. It also covers property to store or dispense clean-burning fuel.
4. Section 45L: Energy Efficient Home Credit
This is essentially the Energy Star credit. You can earn an Energy Efficient Home Credit of up to $5,000 by building or rebuilding a home to meet Energy Star standards.
We see this credit used frequently in large residential or multifamily developments. It applies to each individual unit of housing, so can scale alongside a project of any size.
However, you should be aware that the devil is in the details here. Your design needs to meet every Energy Star standard, along with addition requirements.
Miss one, and you won’t qualify for the credit.
Why A&E firms should educate developers and building owners on green tax credits and incentives
The best thing you can do is work any available tax incentives into your design proposals — and then educate your clients or potential clients on what incentives are on the table. This can literally be the difference between a project getting approved or abandoned.
Depending on the project, a single tax incentive may lead to hundreds of thousands or even millions of dollars in cost reductions. And in many cases, more than one tax incentive may apply.
By taking the time to understand key tax incentives and then sharing that understanding with developers, building owners and other people you do business with, you’ll literally open new doors for your firm, all while generating opportunities that contribute to a greener, more sustainable economy.
How will the Trump tax bill change tax incentives for A&E firms?
The Trump administration’s signature budget and tax bill, the One Big Beautiful Bill Act, seeks to eliminate many of the clean energy tax incentives passed under earlier legislation like the Inflation Reduction Act. It is currently facing consideration by the Senate after passing the House in late May.
While the bill may ultimately fail to become law or be significantly rewritten during the legislative process, it currently places several key tax incentives on the chopping block. The version of the bill voted through by the House cuts or phases out:
- Section 48E: Clean Electricity Investment Credit
- Section 30C: Alternative Fuel Vehicle Refueling Property Credit
- Section 45L: Energy Efficient Home Credit
Should the bill pass, cuts to clean energy tax incentives would not kick in immediately. Current projects or those being planned today and put into action in 2025 would likely still qualify for incentives.
If you do have a project in the pipeline that could take advantage of these incentives, now is a critical time to move it forward.
How Wipfli can help
Use our resource hub to stay up to date on the budget bill as it works its way through Congress, so you know the potential implications for your business.
And know that you don’t have to master clean energy tax incentives on your own. Our team of advisors and former architects works with A&E firms to claim any specific tax incentives relevant to your next project, so it becomes more profitable for everyone involved. Take the quiz to find out which incentives you may qualify for.
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