The Reasons Behind the EPACT 2005 Tax Deduction Program

by | Sep 17, 2014 | Money And Finance

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Sometimes it is difficult to understand just why various government programs are put in place. However, when it comes to the EPACT 2005 tax deduction program the results anticipated are very easy to see.

Unfortunately many businesses, perhaps due to misunderstandings or lack of information, did not take advantage of the initial EPACT 2005 tax deduction but were able to take advantage of it before the current end of the program on January 1, 2014.

The last few years of the program showed the amount of interest by building owners and other involved individuals in extending the program even beyond the January 1, 2014 date.

Increased Energy Efficiency

The single driving force behind the EPACT 2005 tax deduction was to encourage businesses, through a tax deduction but not a tax credit, to voluntarily lower their consumption of energy.

Since the program was set up as a deduction rather than a credit it was cost effective for the government while providing the incentive needed to prompt businesses to voluntarily cut energy use by an initial 50% against a similar reference building.

The good news is that that 50% deduction was later modified to different rates based on the actual system within the building including lighting, HVAC including hot water systems, as well as the building envelope.


The original EPACT 2005 tax deduction was designed to provide 4 years for businesses to use the program and would have expired and ended on January 1 of 2009. However, in 2008 President Bush signed the Emergency Economic Stabilization Act that extended the program, with the modification for energy savings by category, until January 1, 2014.

The results of the program have been very positive, with the biggest change noted in the lighting category for most businesses. A large number of existing buildings upgraded to much more efficient LED lighting sources that had an immediate impact on overall energy use but will also continue to do so into the future.

In addition, more energy savings in major building systems such as HVAC and water heating systems have also created a marked decrease in power usage in major industrial and commercial areas since the beginning of the EPACT 2005 tax deduction program. For more information visit online – Walker Reid Strategies.

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