About the EPAct 2005 Tax Deduction

In 2005, the government enacted the Energy Policy Act of 2005, otherwise known as EPAct 2005. As part of this act, businesses and homeowners alike were urged to make environmentally-friendly changes to their businesses and homes to help save the environment and provide them with some financial relief as well. It also provided an EPAct 2005 tax deduction for anyone who implemented the appropriate changes to their buildings. However, there are important things to understand about this act.

Areas of Improvement

The total amount of the deduction maxes out at $0.60 per square foot for each of the three aspects that are involved in this act. This means businesses can deduct up to $1.80 per square foot for their business if they choose to implement all three elements into their building. The three areas a business can focus on include the lighting used, the HVAC system and the business envelope, which refers to anything that creates a barrier between the interior of the business and the external environment.


Just because your business completes the processes listed in the EPAct 2005 tax deduction list doesn’t mean the business automatically qualifies for the deduction. There are many aspects you must consider beyond what you actually do to comply. You must have an energy analysis completed before the work is done, as well as an inspection after the work is completed. All this must be done by someone who is qualified to work with these deductions to ensure full compliance.

Partial Deductions

The best part of this type of deduction is it is not an all or nothing deduction like many other types of tax deductions can be. Instead, this deduction can be taken as a partial deduction. For instance, if you only have the money to change over the lighting for your business or you replaced the HVAC system several years ago, you can deduct only the parts with which you are in compliance.

The EPAct 2005 tax deduction is a great way for you to save money on your energy-saving changes to help your business operate more efficiently. Before you can take this tax deduction, though, it is important to understand which areas of improvement will qualify, as well as what you must do to qualify for the deduction. It is also important to know you can get a partial deduction if you choose not to complete all aspects of the conversion.


To learn more about the EPAct 2005 tax deduction and how it works, visit the Walker Reid Strategies website.

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Author: Myrtice Lovett

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