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? Atlantic City Electric’s Energy Solutions for Business programs can help identify hidden waste and offset upgrade costs with technical guidance and incentives, making it easier than ever to take action now rather than later.

Here are three ways South Jersey businesses can benefit:

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 up to $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A manufacturing facility planning a $200,000 upgrade to replace outdated lighting with LEDs could combine the 179D federal tax deduction with Atlantic City Electric’s Prescriptive and Custom Programs incentives. This combination dramatically lowers up-front costs, reduces energy use, and accelerates ROI, 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.

The Longer You Wait, The More You Pay—You Just Don’t See It Yet

The real opportunity appears when businesses combine federal tax deductions with available Atlantic City Electric incentives.

Example: HVAC and Water Heating

A commercial building replacing inefficient HVAC units and water heaters could pair the 179D deduction with our Direct Install program, which offers up to 80% 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.

Energy Costs Won’t Wait. The Savings Opportunity Won’t Either

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

What’s Eligible?

Projects may include new construction or retrofits to existing buildings (five years or older for the Alternative Pathway). Typical eligible systems include:

Interior lighting
HVAC and controls
Hot water systems
Building envelope improvements

These aren’t just upgrades, they’re strategic reductions in energy consumption that benefit everyone inside the building.

Example: System Optimization

A mid‑size office investing $90,000 in building system improvements could leverage the Energy Management program along with the 179D tax deduction. The Energy Management 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 your 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 taking the next step, you can secure federal tax deductions, pair them with Atlantic City Electric incentives, and start reducing operating costs all while improving building performance and long-term value.

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