Doing Nothing Gets Expensive: Federal Tax Deductions Are Ending

By Clara Bright

If you own or manage a commercial building, there’s a limited-time opportunity to cut energy costs and boost your bottom line. The 179D Energy Efficient Commercial Buildings Tax Deduction (179D) offers meaningful savings, but only if you act soon.

With this benefit expiring at the end of June 2026, waiting can actually cost more than moving forward. The real expense isn’t the upgrade. It’s the energy waste your building is already paying for every month, even if it doesn’t show up as a line item.

Every month you delay, the costs keep piling up—wasted energy, extra maintenance, and performance losses that never show up as “missed savings” but are paid just the same. The good news? Delmarva Power’s Energy Savings for Business programs can help identify hidden waste and offset upgrade costs with technical guidance and incentives, making it easier than ever to get started sooner rather than later.

Here are three ways Maryland businesses can benefit:

1. Turn wasted energy into federal tax savings—up to $5.81 per square foot.

Picture a regional grocery store upgrading its HVAC and lighting to meet efficiency standards. With 179D, that store could claim $2.90–$5.81 per square foot when prevailing wage and apprenticeship requirements are met.

For a 50,000-square-foot facility, that’s more than $290,000 in tax deductions—savings that can help fund additional improvements or support business growth.

Example: Lighting Upgrade

A manufacturing facility planning a $200,000 upgrade to replace outdated lighting with LED bulbs could combine the 179D federal tax deduction with Delmarva Power’s Prescriptive and Custom program incentives. This combination dramatically lowers up-front costs, reduces energy use, and accelerates return on investment, turning a major investment into a more manageable project while saving on energy bills for years to come.

Postponing the upgrade doesn’t create savings. It simply locks in waste. The facility pays for inefficient lighting each month, and those dollars are gone for good.

2. The longer you wait, the more you pay—you just don’t see it yet.

The best value comes when businesses stack federal tax deductions with available Delmarva Power incentives. If upfront costs are a concern, there are options like tax equity financing or specialized energy‑efficiency loans that offer very low interest rates.

Example: HVAC and Water Heating

A commercial building replacing inefficient HVAC units and water heaters could pair the 179D deduction with our Energy Savings for Business program, which offers up to 70% in financial incentives for equipment, including installation and labor. For a project that might otherwise cost $150,000, these stacked incentives can cut the effective cost by more than half while delivering ongoing energy savings.

Waiting only increases the price tag. Every month that passes brings higher heating and cooling costs and lost incentives that could have helped pay for the upgrade.

3. Energy costs won’t wait. The savings opportunity won’t either.

Upgrades such as high-efficiency HVAC, controls, and LED bulbs can reduce energy use by 20–50%. Over time, those savings add up just as wasted energy does today. Taking action now turns quiet, ongoing costs into real, trackable savings.

What’s eligible?

Projects may include new construction or retrofits to existing buildings. Common examples are:

Interior lighting
HVAC and controls
Hot water systems
Building envelope

These types of energy‑efficient upgrades reduce operational costs by using less power to deliver the same—or better—performance, while creating a higher‑value asset. Just as important, high‑performance buildings improve comfort and well‑being, which can support productivity and employee retention—protecting your biggest investment: your workforce.

Example: System Optimization

A midsize office investing $90,000 in building system improvements could leverage the Building Tune-up program along with the 179D tax deduction. The Building Tune-up program takes a systematic approach to fine‑tuning electrical, mechanical, and control systems for optimal efficiency, helping reduce energy use and operational costs while complementing tax deduction benefits for even greater overall impact.

Putting off optimization keeps inefficiencies hidden and expensive. Poorly tuned systems consume extra energy month after month, and those losses can’t be recaptured.

Next Steps

Because every building and tax situation is unique, consult a qualified tax professional to determine eligibility and maximize benefits.

Doing nothing may feel simpler, but it steadily gets costly. Each month of inaction means paying for inefficiency you can’t deduct, can’t see, and can’t recover.

By acting now, you can secure federal tax deductions, pair them with Delmarva Power incentives, and start reducing operating costs all while improving building performance and long-term value.

Ready to get started? We’re here to help.