Section 179D After June 30, 2026: Which Ohio Building Projects Can Still Qualify?

The most important 2026 Section 179D question is no longer simply whether a building is energy efficient. For many Ohio projects, the deciding timing issue is when construction begins.

Under current federal law, Section 179D is terminated for property the construction of which begins after June 30, 2026. That means some projects completed after the deadline may still remain eligible if construction began on or before June 30 and all other Section 179D requirements are satisfied.



Since 2004, RCG Tax Partners has completed more than 25,000 R&D tax credit studies and identified over $750 million in tax savings. RCG also provides Section 179D services for energy-efficient commercial building projects and supports the technical documentation needed for these evaluations. 

The 2026 Section 179D Deadline at a Glance  

The cutoff is based on construction beginning, not simply when the building is completed or placed in service.

Can a Project Finished After June 30, 2026 Still Qualify?

Potentially, yes.

The law does not say that every Section 179D project must be completed by June 30, 2026. Instead, it terminates the deduction for property whose construction begins after that date.

That distinction matters for longer Ohio projects already underway, including:

•  New commercial buildings
• Manufacturing and industrial facilities
• Warehouses and distribution centers
• Major HVAC upgrades
• Lighting projects
• Building-envelope improvements
• Government-owned and qualifying tax-exempt projects



A qualifying construction-start date is only one part of the analysis. Energy performance, certification, ownership or designer allocation, and other applicable requirements still need to be satisfied.

What Counts as “Beginning of Construction”?  

This is the area Ohio project teams should document carefully.

Existing IRS Section 179D guidance has recognized principles based on two approaches for determining when construction or installation begins:

Physical Work Test
Construction may be treated as beginning when physical work of a significant nature starts.

Five Percent Safe Harbor
Prior Section 179D beginning-of-construction guidance has also recognized a method based on paying or incurring at least 5% of total project cost, subject to applicable requirements and facts.



However, the IRS has stated that additional guidance will be issued regarding provisions affected by the 2025 legislation. Businesses should therefore avoid assuming that signing a contract, ordering materials, or making an early payment by itself establishes eligibility for the June 30, 2026 termination rule. 

A Practical Pre-Deadline Review for Ohio Projects  

Rather than waiting until tax-return preparation, owners, architects, engineers, and CPAs should review projects in three groups.

Already Under Construction 

Preserve evidence of when substantial construction activity began. Projects already underway before the deadline may still warrant a Section 179D study.

Scheduled to Start Before June 30  

Document actual construction activity, contracts, costs, site progress, and technical records. A scheduled start date alone may not establish the required tax position.

Starting After June 30  

Under current law, property whose construction begins after June 30, 2026 falls outside Section 179D. 

What Documentation Should Project Teams Preserve?  

For projects near the Section 179D deadline 2026, timing records can become especially important.

Helpful records may include:

•  Construction contracts
• Work orders and contractor schedules
• Invoices and payment records
• Site-progress photographs
• Mechanical and electrical drawings
• Lighting plans
• Building-envelope specifications
• Records showing when physical construction activity occurred



These records may support the construction-start analysis while also providing information needed for the underlying Section 179D technical review.

The Deadline Does Not Replace the Energy-Efficiency Test  

Beginning construction before June 30 does not automatically qualify a project.

Section 179D remains an energy-efficient commercial building deduction. Qualifying property generally involves improvements to systems such as:

• Interior lighting
• Heating, cooling, ventilation, and hot-water systems
• Building-envelope components

Applicable energy-efficiency requirements, certification, and documentation still need to be satisfied.

Eligible designers may also receive an allocation of the deduction for certain government-owned and tax-exempt building projects, subject to the Section 179D rules.

What Ohio Owners and Designers Should Ask Now  

Before the cutoff becomes a historical documentation question, project teams should be able to answer:

• When did construction actually begin?
• What evidence supports that date?
• Which energy-efficient building systems are part of the project?
• Who may be eligible to claim the deduction?
• Are the technical and allocation records being preserved?

Those questions are more useful in 2026 than simply asking whether Section 179D still exists.

FAQs About Section 179D After June 30, 2026  

Review Ohio Projects Before the Cutoff Becomes Harder to Prove  

For Section 179D after June 30, 2026, project timing is now a critical part of eligibility analysis. Ohio owners and design professionals with projects already underway or scheduled to start before the deadline should preserve construction records and evaluate Section 179D while the relevant project information is readily available.

RCG Tax Partners provides Section 179D technical reviews and documentation support for qualifying commercial building projects in Ohio.