There’s still plenty of time to take advantage of the Section 179d tax deductions available to commercial enterprises that convert over to LED lighting. The new lighting must go into service by the end of 2013 to qualify for this generous federal tax deduction.

This tax deduction helps to offset some of the initial cost of an LED lighting conversion. Once installed, such lighting typically offers 50-90 percent energy savings compared to incandescent, fluorescent, sodium vapor, and metal halide lights. They also last much longer than the lights that they replace. Very little heat is generated by LEDs, so air conditioning expense is reduced in closed areas. Furthermore, light dispersion is often much improved with LED lighting. Hot spots and dark areas are more evenly illuminated.

There are a couple of requirements to meet to qualify for a 179D deduction:

1) Energy Savings — The new lighting must reduce energy consumption by a minimum of 25 percent. If a warehouse facility is involved, the energy savings must be at least fifty percent. LED lighting is so efficient that these standards are usually quite easy to achieve.

2) Certification — A qualified professional must properly certify the savings, following IRS regulations. The records generated are not filed with a business tax return. Rather, the paperwork must remain available in company files for potential IRS review. IRS-approved software must be used to calculate the square footage of the project. A deduction of up to 60 cents per sq ft is available when the installation of new lighting is properly certified. The deduction will be included in the ‘Other Deductions’ area of the business tax return.

Tip: Get a copy of the license of the person certifying the savings, to prove that he/she was qualified at the time of the LED lighting installation.

A little effort now, to complete an installation of LED lights in your commercial space by December 31, 2013, will also enhance your bottom line for many years to come. For more insight into the specifics of LED lighting conversions, please contact us at Relumination.