Specific Lighting Deduction Methods
Space-by-Space Method
If you can calculate the lighting power density (LPD) for each space in your building or facility, you can determine your potential tax deductions based on the space-by-space method, which allows for higher watts per square foot.
To meet the target energy savings set out by the Energy Policy Act of 2005 (EPACT), your lighting will need to reduce your LPD beyond the ASHRAE 90.1-2001 lighting standard by anywhere from 25-40%. Based on where your new lighting falls within this range, you can take a tax deduction between $0.30 and $0.60 per square foot. The following table shows you what kinds of deductions you can expect, based on your new lighting:
| % of LPD reduction beyond Standard 90.1-2001 | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 25% | 26% | 27% | 28% | 29% | 30% | 31% | 32% | 33% | 34% | 35% | 36% | 37% | 38% | 39% | 40% | >40% |
| $0.30 | $0.32 | $0.34 | $0.36 | $0.38 | $0.40 | $0.42 | $0.44 | $0.46 | $0.48 | $0.50 | $0.52 | $0.54 | $0.56 | $0.58 | $0.60 | $0.60 |
| Amount of Eligible Tax Deduction/ sq.ft. | ||||||||||||||||
If you are upgrading a warehouse lighting system, your new lighting power density must exceed the minimum requirements of the ASHRAE standard by 50% in order to qualify for a tax break.
Building Area Method
If you are unable to determine your LPD on a space-by-space basis, or if you want to simplify your calculations, you can use the building area method to determine your potential tax savings.
The whole building method breaks out tax incentives by type of building (office, school/university, retail and warehouse) and by how much you reduce your LPD over the ASHRAE standard. As the table below illustrates, tax deductions of between $0.30 and $0.60 per square foot are available under the whole building method.
| Tax Deduction | ||||||
|---|---|---|---|---|---|---|
| ASHRAE/IES 90.1-1999 and 90.1-2001 | Interim Lighting Rules | |||||
| Office | School/University | Retail | Warehouse | LPD | Non-Warehouse | Warehouse |
| LPD (W/sq.ft.) | LPD (W/sq.ft.) | LPD (W/sq.ft.) | LPD (W/sq.ft.) | Reduction | $/sq.ft. | $/sq.ft. |
| 1.3 | 1.5 | 1.9 | 1.2 | 0% | $0.00 | $0.00 |
| 0.975 | 1.125 | 1.425 | 0.900 | 25% | $0.30 | $0.00 |
| 0.910 | 1.050 | 1.330 | 0.840 | 30% | $0.40 | $0.00 |
| 0.845 | 0.975 | 1.235 | 0.780 | 35% | $0.50 | $0.00 |
| 0.780 | 0.900 | 1.140 | 0.720 | 40% | $0.60 | $0.00 |
| 0.715 | 0.825 | 1.045 | 0.660 | 45% | $0.60 | $0.00 |
| 0.650 | 0.750 | 0.950 | 0.600 | 50% | $0.60 | $0.60 |
You should be aware that to qualify for EPAct 2005 tax deductions on your lighting, in addition to surpassing the ASHRAE 90.1-2001 LPD standard:
- all controls provisions in the Standard must be met,
- bi-level switching must be installed for most buildings, and
- your lighting application must meet the minimum requirements for calculated light levels as set forth in the 9th Edition of the IESNA Lighting Handbook.
Advance can help you find the right solutions to increase your lighting efficiency, reduce your energy costs, and take advantage of the tax incentives offered by EPAct 2005. Get started here to determine the best solution for you.
(Source: Energy Policy Act of 2005 Encourages Energy-Efficient Lighting with Tax Deduction By Craig DiLouie, Lighting Controls Association, September, 2005)
