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  • Writer's pictureTom Petersen

The Inflation Reduction Act: What Facilities Managers Need to Know

Updated: Aug 28, 2023




When the Inflation Reduction Act (IRA) was signed into federal law by President Biden on August 16th, it became one of the most impactful pieces of legislation in recent times — affecting broad swaths of federal healthcare, tax, and climate law. Environmental, health, and safety (EHS) departments, as well as facilities management units, will certainly feel its impacts in the coming years. New tax deductions, permitting reforms, and greenhouse gas reduction incentives are amongst the impending changes. 

As a premier environmental engineering and consultancy firm, EES is invested in making companies aware of the most significant of these updates and announcements.

A major tax deduction expansion is on the horizon, as the IRA will significantly increase the Section 179D deduction for building energy efficiency. Effective January 1, 2023, energy efficiency-related projects in new and existing commercial buildings can deduct up to $5.00 per square foot—providing that they meet prevailing apprenticeship and wage standards—up from a limit of $1.88 per square foot. Additionally, while the maximum 179D deduction could previously only be taken once over the life of the building, one can now ‘max out’ every three years on a commercial building (or four years for a not-for-profit, government, instrumentality, or Tribal Government building). These benefits are also now available to nonprofit hospitals for the first time.

The IRA also provides significant funding for agencies involved in various aspects of permitting. The EPA is slated to receive $40 million through 2026 toward providing more accurate and timely environmental reviews, via investments in staffing and equipment; they also have $100 million earmarked over the same time period for process and review-document development toward making these review processes more efficient. Entities such as the Environmental Review Improvement Fund, the Department of Energy, and the National Oceanic and Atmospheric Administration will also receive significant funds towards streamlining and speeding up their permitting activities.

New incentives for reducing greenhouse gas emissions will also emerge due to the IRA becoming law. A massive $27 billion will go towards establishing the Greenhouse Gas Reduction Fund, providing funding to states, nonprofits, and other institutions for GHG-reducing or -avoiding projects. $8 billion of the Fund is earmarked for disadvantaged and low-income communities; despite allocations like this, it’s important to note that there’s been significant criticism of the bill not doing enough to address climate-justice issues. The IRA also allocates another $5 billion in competitive grants to states, municipalities, and tribes for creating and running new GHG-reduction plans.

With so many changes afoot due to this groundbreaking law, it’s natural to have questions about how your company can best take advantage of the new landscape. Environmental and Engineering Solutions, Inc. has the expert-level knowledge to help you navigate these changes, and make the best choices for both the environment and your bottom line. For more information, you can contact EES President Tom Petersen at tom@eesolutions.net .

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