Starting in 2027, 179D energy savings for most projects are measured against a stricter yardstick. Energy efficient property placed in service in 2027 or 2028 is compared with a reference building that meets ASHRAE Standard 90.1-2019 instead of 90.1-2007, unless its construction began before January 1, 2023. From 2029, the reference standard is 90.1-2022. Because the 2019 reference building is far more efficient, the same design shows a smaller savings percentage, and that can mean a smaller deduction or none at all.
Key takeaways
- Property placed in service in 2027 or 2028 is measured against ASHRAE 90.1-2019. From 2029, it is 90.1-2022.
- Property whose construction began before January 1, 2023 can keep the 90.1-2007 baseline whenever it is placed in service.
- Based on the Department of Energy's national average estimates, a building that just meets 90.1-2019 costs roughly a third less to run than one that just meets 90.1-2007.
- Construction of the property must have begun on or before June 30, 2026 for 179D to be available.
- The construction start date and the placed-in-service date decide whether 179D is available and which baseline applies, so document both.
Which ASHRAE 90.1 standard applies to my building for 179D?
The date the energy efficient property is placed in service decides it, with one exception for older projects. IRS Announcement 2024-24 sets the schedule:
| Placed in service | Reference standard |
|---|---|
| 2015 through 2026 | ASHRAE 90.1-2007 |
| 2027 or 2028 | ASHRAE 90.1-2019 |
| 2029 or later | ASHRAE 90.1-2022 |
The exception: if construction of the property began before January 1, 2023, the 90.1-2007 standard may be used no matter when the property is placed in service.
Section 179D defines the reference standard as the more recent of ASHRAE 90.1-2007 or the latest edition that the Department of Energy has reviewed and the Treasury Secretary has affirmed at least four years before the property is placed in service. The Inflation Reduction Act set this placed-in-service rule. The IRS applied it in Announcement 2024-24, which sets the calendar schedule above and the transition rule for projects whose construction began before January 1, 2023. The IRS also summarizes the rule on its 179D deduction page.
Why does the reference standard matter for the deduction?
179D compares your building's modeled annual energy and power costs for interior lighting, HVAC and hot water, and the building envelope with a reference building that just meets the minimum requirements of ASHRAE Standard 90.1. A building needs at least 25 percent savings to qualify, and the deduction rises with each percentage point above that, up to a maximum rate. For taxable years beginning in 2026, the maximum deduction ranges from $0.59 to $1.19 per square foot, or $2.97 to $5.94 per square foot when prevailing wage and apprenticeship requirements are met. The actual deduction can be lower, because it cannot exceed the cost of the property and is reduced by 179D deductions claimed for the building in recent years.
The baseline does not change those dollar figures. It changes the percentage your building earns, and the percentage decides where on that scale the building lands.
How much stricter is ASHRAE 90.1-2019 than 90.1-2007?
Considerably. The Department of Energy reviews each new edition of Standard 90.1 and estimates how much it lowers energy cost compared with the edition before it. Its national average estimates put the 2010 edition at 18.2 percent below 2007, 2013 at 8.7 percent below 2010, 2016 at 8.3 percent below 2013, and 2019 at 4.3 percent below 2016. Compounded, a building that just meets the 2019 minimums costs roughly a third less to run than one that just meets the 2007 minimums. The 2022 edition, which applies from 2029, is estimated at 8.9 percent below 2019, so a building that just meets 90.1-2022 costs about 40 percent less to run than one that just meets 90.1-2007.
Here is the rough math. A design whose energy cost is half that of a 90.1-2007 reference building saves 50 percent. Measured against a 90.1-2019 reference building that already costs about a third less to run, the same design saves only about 24 percent, just under the 25 percent minimum.
Treat that as an illustration, not a prediction. Real results depend on building type, climate zone, systems, and the modeling rules, and only an energy model answers the question for a specific building.
Which projects does the change affect?
Under the One Big Beautiful Bill Act, 179D is not available for property whose construction begins after June 30, 2026. That narrows the 90.1-2019 baseline to a specific group: property whose construction began between January 1, 2023 and June 30, 2026 and that is placed in service in 2027 or 2028. Larger, longer builds land here most often, such as hospitals, schools and university buildings, high-rise multifamily, and phased renovations. Property in that group placed in service in 2029 or later moves to 90.1-2022.
How can building owners and designers prepare?
- Pin down two dates for every project. The construction start date decides whether 179D is available at all (on or before June 30, 2026) and whether the 2007 baseline carries over (before January 1, 2023). The placed-in-service date decides the baseline otherwise. Keep records such as binding contracts, paid invoices, construction logs, dated site photos, and certificates of occupancy.
- Know which side of January 1, 2027 each project falls on. For a project whose construction began on or after January 1, 2023, property placed in service in December 2026 is measured against 90.1-2007, and the same property placed in service in January 2027 is measured against 90.1-2019. That is worth knowing early in the schedule, not at closeout.
- Model against 90.1-2019 while the design can still change. For a project finishing in 2027 or later, an early energy model shows whether the design clears 25 percent against the new baseline and which measures close the gap: HVAC efficiency, lighting power and controls, or envelope upgrades. Once the building is finished, the result is fixed.
- Designers of public and nonprofit buildings follow the same schedule. Allocations from government and tax-exempt owners use the same reference standards, so the allocation conversation for a 2027 completion should start with a 90.1-2019 model.
- Plan with an adjusted number. Our completed studies were measured against 90.1-2007. For a project whose construction began between January 1, 2023 and June 30, 2026 and that is placed in service in 2027 or later, our 179D Deduction Calculator estimates the effect of the 90.1-2019 or 90.1-2022 baseline using the Department of Energy's national average comparisons. When the adjusted savings fall below 25 percent, it flags the building for a closer look instead of showing a figure.
If construction on your project began on or before June 30, 2026 and it is still underway, the next two years decide which baseline it meets. Every aecre 179D study is certified by a Professional Engineer licensed in the building's state. Our 179D energy deduction overview explains how a study works, or Book a Discovery Call to check a specific project.
Frequently asked questions
No. The per-square-foot amounts are set in the statute, and the IRS adjusts them for inflation each year. The baseline changes the energy savings percentage your building earns, and that percentage decides where on the scale the building lands.
ASHRAE 90.1-2007. Under IRS Announcement 2024-24, if construction of the energy efficient property began before January 1, 2023, the 90.1-2007 reference standard may be used no matter when it is placed in service.
ASHRAE 90.1-2022, unless construction of the property began before January 1, 2023. Construction of the property must also have begun on or before June 30, 2026 for 179D to be available at all.
No. Under the One Big Beautiful Bill Act, 179D does not apply to property whose construction begins after June 30, 2026, whichever reference standard would have applied.