Energy Efficiency Tax Deductions/Credits for Commercial and Residential Builders

Greetings! In 2009, the United States government established the American Recovery and Reinvestment Act (ARRA). The act is also known as the “Stimulus Package”. These guidelines not only offer savings to homeowners, but also builders and owners of commercial properties and builders of residential properties.

Qualifying for the tax deduction or credit is dependent on the level of energy efficiency you choose. Items that can be modified or installed to qualify for the savings include: installation of energy efficient interior lighting, building envelope, or heating, cooling, ventilation, or hot water systems. An excellent choice in reducing energy costs is NCFI High Performance Spray Foam Insulation which is available in InsulStar®, Sealite™, InsulQuiet™, and InsulStar® Plus. NCFI High Performance Spray Foam Insulation products are excellent choices for the builder who wants to maximize energy efficiency.

Residential – Builders

Builders of residential properties are eligible for a $2,000 tax credit for homes that are deemed energy efficient by reaching a 50% energy savings for heating and cooling beyond the 2004 International Energy Conservation Code (IECC). This credit also applies to manufacturers of manufactured homes; and in addition these manufacturers are also eligible for a tax credit of $1,000 for homes that reach a 30% energy savings for heating and cooling beyond the 2004 IECC. Residential builders will need to file IRS form 8908.pdfin order to receive the tax credit.

Commercial – Builders

Builders (owners or designers) of commercial properties are eligible for up to $1.80 per square foot tax deduction for new or existing commercial buildings if they save at least 50% on heating and cooling energy. Builders and owners are also eligible for a $.60 per square foot deduction if a building is modified to affect the energy rating of the building envelope, lighting, or heating and cooling systems.

Additional information for commercial & residential builders:

  • The deductions are available for commercial buildings placed in service from January 1, 2006 through December 31, 2013.
  • Improvements to the property must reduce the energy and power costs by 50% or more in comparison to buildings with minimum requirements.
  • Tenants are also eligible for the tax savings if they are responsible for the installation of the products or construction of the building.
  • Energy savings must be calculated using approved software which is available at the U.S. Department of Energy website.
  • To learn more about what opportunities are available for commercial builders who are interested in government contracts, visit
  • For more information, please contact your NCFI Account Manager >