TL;DR: Section 179D — the per-square-foot energy-efficiency deduction for commercial building improvements including roofing — was terminated by the One Big Beautiful Bill Act (PL 119-21, U.S. federal, effective July 4, 2025) for any property where construction begins after June 30, 2026. No direct replacement exists. The tools still available for commercial roof restorations: Section 179 full expensing and 100% bonus depreciation, both of which require no energy certification and apply to the same projects that previously stacked with 179D.
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What Changed and When
The One Big Beautiful Bill Act (PL 119-21, signed and effective July 4, 2025) terminated Section 179D for property where construction begins after June 30, 2026. The IRS FAQ on OBBBA modifications states the deduction "will not be allowed with respect to any property the construction of which begins after June 30, 2026" (IRS FAQ on modifications to §179D under PL 119-21, U.S. federal).
This is a hard cutoff. No phase-down. No reduced rate for post-deadline projects. Projects with a qualifying construction start on or before June 30, 2026 still claim the deduction under the prior rules regardless of when the work finishes. Everything starting after that date: ineligible.
What Section 179D Was
Section 179D allowed commercial building owners to claim a per-square-foot deduction for qualifying improvements to the building envelope — the category that includes roofing — when those improvements reduced energy consumption against the ASHRAE 90.1 baseline.
The deduction range before the cutoff:
- $0.59–$1.19/sq ft at 25–55% energy savings (base rate, 2026 inflation-adjusted figures, IRS)
- $2.97–$5.94/sq ft for projects meeting prevailing wage and apprenticeship requirements
On a 100,000 sq ft commercial building, the base-rate deduction ran $59,000–$119,000. At the enhanced rate: $297,000–$594,000.
The certification requirement was a meaningful barrier. A licensed architect or engineer had to model and certify the energy savings against the ASHRAE 90.1 baseline (IRS Notice 2022-61, U.S. federal, effective 2023 and after). Most standard roofing contracts did not include this scope. Building owners who did not add a qualified individual to the project before work closed missed the deduction — retroactive certification is not accepted.
Silicone restoration coatings over deteriorating TPO or EPDM membranes typically met the threshold in older, less-efficient buildings by reducing roof surface temperature and HVAC load. Newer, already-compliant buildings rarely cleared the required savings percentage.
Why OBBBA Eliminated It
Section 179D was part of the Inflation Reduction Act's energy-efficiency incentive package. The OBBBA repealed much of that package. The IRS FAQ on OBBBA modifications does not explain the legislative rationale. It notes that "future guidance will be issued on other provisions impacted by the passage of OBBB" — but offers no replacement provision for energy-efficient building improvements.
There is no successor deduction targeting energy-efficient commercial building work.
What Replaced It
Nothing replaced 179D directly. What remains for commercial roof restorations:
Section 179 — Full year-one expensing, no certification required
Qualified improvement property, including commercial roof systems, qualifies for Section 179 full expensing in the year placed in service. The 2026 deduction limit is $2,560,000 with a phaseout beginning at $4,090,000 in total qualified property placed in service (IRS Rev. Proc. 2025-32, U.S. federal, tax year 2026). No energy certification. No ASHRAE baseline calculation. No prevailing wage requirement. For the expanded scope under the OBBBA, see Section 179 for commercial roofing in 2026.
100% Bonus Depreciation — Permanent, no income cap
The OBBBA permanently reinstated 100% bonus depreciation for qualified improvement property placed in service after January 19, 2025 (PL 119-21, U.S. federal, effective July 4, 2025). Unlike Section 179, bonus depreciation is not limited to taxable income — it can generate a net operating loss. For building owners whose taxable income falls below the restoration cost in a given year, bonus depreciation is the more useful tool. Apply Section 179 first; bonus depreciation picks up any remainder.
Utility rebates — Unchanged
ENERGY STAR-certified roof coating rebates from state utilities were not affected by the OBBBA. NYSERDA (New York), Xcel Energy (Colorado, Minnesota), and Duke Energy (Carolinas, Midwest) among others continue to offer rebates for qualifying reflective coatings. These programs are administered by utilities independently of federal legislation.
What the Numbers Look Like Now
For building owners who could fully use Section 179 before the deadline, losing 179D does not materially change the effective project cost. Section 179 already expenses 100% of the depreciable basis in year one. The 179D deduction reduced that basis by the same amount it deducted — so the combined 179D + 179 stack produced the same total deduction as Section 179 alone on the original basis. The practical loss is the certification overhead 179D required.
The exception: building owners whose Section 179 deduction was income-limited. In those cases, 179D provided a deduction independent of the income constraint. Bonus depreciation is now the tool for that scenario — it has no income cap.
One project makes this concrete. A distribution facility spanning seven acres — well over 300,000 square feet of roof — went through a full silicone restoration. The building owner applied Section 179 to expense the full restoration cost in year one. No 179D certification was in scope. No ASHRAE energy modeling. The year-one deduction came entirely from Section 179, and the project economics were unchanged by 179D's expiration.
For most commercial property owners with a restoration already scoped: the decision does not change. Section 179 provides 100% first-year expensing. Utility rebates remain available. The energy savings from a reflective silicone coating are unchanged by any tax provision.
What to Do Now
Projects with construction starting before June 30, 2026: 179D still applies under the prior rules. Confirm the energy certification is in your contract scope or engage a qualified individual before the project closes — retroactive certification is not available.
Projects starting after June 30: Budget without 179D. Section 179 and applicable utility rebates are the available incentives. Request a proposal that includes the full tax treatment — Section 179 basis calculation and utility rebate identification for your state.
Projects where 179D drove the approval decision: Rerun the math with Section 179 as the primary incentive. For most commercial roof restorations under $2.56M, the year-one deduction is comparable. See How to Justify Roof Restoration to Your CFO for a framework on presenting the revised numbers, and Stacking Tax Benefits on a Commercial Roof Restoration for the updated two-layer strategy.
FAQ
Does 179D still apply to projects that started before June 30, 2026, even if they finish later?
Yes. The OBBBA termination applies to property where construction begins after June 30, 2026. A project that commenced construction — or had a signed contract with at least 5% of the project cost paid or incurred — on or before June 30 qualifies under the prior rules, regardless of when the work is completed or placed in service.
Can bonus depreciation substitute for 179D on new projects?
Not directly. 179D was a per-square-foot deduction based on certified energy savings, calculated separately from the depreciable basis. Bonus depreciation expenses the depreciable basis itself. For building owners who could fully use Section 179, the net tax position is similar. For income-limited owners, bonus depreciation replaces what 179D provided outside the income constraint.
Is 179D permanently gone?
The OBBBA does not include a sunset on the repeal. Absent new legislation, 179D is terminated for new projects going forward. No reinstatement legislation has been introduced as of June 2026.
What about the 179D provision for government building designers?
The provision allowing architects and engineers on government building projects to claim the 179D deduction is also terminated for projects where construction begins after June 30, 2026.
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*This post covers the termination of Section 179D under the One Big Beautiful Bill Act (PL 119-21, U.S. federal, effective July 4, 2025). Nothing here is tax or legal advice. Confirm the applicable rules for your project with a qualified tax professional. Pre-repeal 179D deduction rates cited are 2026 inflation-adjusted estimates; confirm final amounts with a qualified tax advisor. Section 179 limits are 2026 figures per IRS Rev. Proc. 2025-32. Bonus depreciation rules per PL 119-21.*
*Drafted with AI assistance. Pending review by the Certified Roofing operations team.*