The Tax Aspects of Airport LED Lighting

As result of their large facility complexes, high maintenance costs, and 24/7 operation, LED lighting is quickly being utilized for all aspects of airport lighting. The opportunity for Section 179D EPAct lighting tax deductions is helping to further accelerate the airport LED lighting conversion process. Energy is the largest operating expense at an airport, exceeded only by personel.1

The Section 179D Tax Provisions

Pursuant to Section 179D and its underlying ASHRAE (American Society of Heating Refrigeration and Air Conditioning) building energy code, commercial buildings are eligible for energy efficiency tax deductions of up to $1.80 per square foot. If a building’s energy reducing investment doesn't qualify for the full $1.80 per square foot deduction, deductions are available for any of the three major sub-systems, including:

1. Lighting

2. HVAC (Heating, Ventilation and Air Conditioning) and

3. The building envelope

Each component can qualify for up to 60 cents per square foot EPAct tax deductions. The building envelope is anything on the perimeter of the building that touches the outside world including roof, walls, windows, doors the foundation and related insulation layers.

Parking Garage LED Applications

Airport parking garages are normally the first airport structures to install LED’s since the LED parking garage product technology is widely available and the overall economic payback is very favorable. These are large physical spaces where the energy and maintenance savings is substantial and where the EPAct tax savings which drives off of square footage works particularly well1.

There are perpetual maintenance savings, when using LED’s, as the lamps do not need to be replaced as often. The U.S. Department of Energy defines the difference between the lengths of life for different types of lighting, giving a length in hours. Linear fluorescents have a maximum rated life of 30,000 hours while LED’s have a maximum useful life of 50,000 hours. The difference in standards between rated and useful life are the two accepted ratings, since LED’s are actually projected to last longer than 50,000 hours2. The difference in language is due to the expectation that linear fluorescents will completely fail after 30,000 hours, it’s “rated life” and the expectation that LED’s will function well beyond 50,000 hours, but will be at the end of their “useful life” which is defined by the LED only producing 70% of its original output2.

With nearly double the maximum light producing hours, LED’s need to be changed less frequently. Fluorescents also denigrate when turned on and off frequently, reducing their actual lifespan. The denigration problem with fluorescents also makes LED’s better candidates for occupancy sensors and daylighting applications as they may be dimmed and turned off frequently without impacting the LED’s length of life. Parking garages typically use one of three lighting technologies when retrofitting including LED’s, induction lighting, and fluorescents3.

Main Terminal Buildings

Main airport terminal buildings are large structures and at major airports they are essentially cities unto themselves. Access to all terminal spaces is subject to time consuming security processes which makes lighting lamp replacement and repair substantially more expensive than in other building spaces.

The large reception, ticketing areas, gateways, and passage process areas present equally large opportunities for energy savings and EPAct tax deductions. Many of these areas have high ceilings where longer life lamps save substantial costs related to utilizing aerial platform equipment. Airports have extensive lattice networks of walkways and hallways where LED strip lighting is a perfect application for replacement or new construction.

Rapid Airline Industry Consolidation

The United States airline industry is rapidly restructuring and consolidating which results in major facilities realignment and upgrades. This includes major hub point centralization, terminal restructuring including gateways and baggage area, and consolidation of administrative centers, data center operations, and eventually corporate offices. The three most recent large scale Airline mergers are presented in the table below. Speculation is that American Airlines, Jet Blue Airways, and U.S Airways are now more likely merger candidates.


Airport Support Services

Within airports there is an increasing amount of support services including, restaurants, retailers, newsstands and duty free shops. Many of these businesses have their own LED lighting initiatives particularly the national food service providers. National food chains with major LED initiatives often found at Airports include Starbucks and McDonald’s. Airport management may want to consider lease terms requiring tenants to meet energy efficient standards at the better of the local building energy code, or their most current energy efficient prototype structure.

Airport Exterior LED Lighting

Airports utilize a tremendous amount of exterior lighting for facilities, grounds, parking lots, and runways. Although these applications of energy efficient, LED lighting are not eligible for tax savings they produce comparable energy and maintenance cost savings and are often eligible for large utility rebates.

Turning the Airport focus to HVAC

HVAC is by the far the largest building energy user in airports. Once the current wave of LED lighting upgrades peaks the high cost of airport HVAC energy consumption will be even more apparent. Airports are perfect candidates for highly efficient large scale central plant systems such as central chillers5, thermal storage6 and geothermal. These highly efficient systems typically generate very large EPAct tax deductions. To achieve the airport HVAC tax deduction the building must be modeled in IRS approved modeling software.

LEED Airport Buildings

Many new and expanding airport facilities are achieving the coveted LEED certification. Since LEED buildings have already been modeled, the new lower wattages from LED’s lighting upgrades should be inserted into the existing EPAct tax model to see if multiple tax deductions are available. The following table presents the LED lighting, HVAC, and building envelope deductions typically available for some selected airport LEED facilities.



Energy efficient airports benefit all Americans. LED interior lighting technology and EPAct square footage tax deductions fit perfectly with large airport facility complexes. Airport business managers and lighting designers should be sure to act on all of their interior LED lighting projects before the EPAct statute expiration on December 31st, 2013.


1.Winegard, Michael “Efficient LED’s Take Off at Airports” National Parking Association’s: PARKING. November 2009. Pg. 28-29, 32.

2. "LED Application Project Brief: Logan International Airport | BetaLED." LED Lights: Flood, Interior, Streetlights, Parking, Canopy, Security, LEDway, Essential | BetaLED. Web. 11 Nov. 2010. <>.

3. “Using Light-Emitting Diodes: Measuring Light Source Life.” U.S. Department of Energy.

4.Goulding, Charles, Goldman, Jacob, Thomas, D. Malcom. “Multiple Lighting Technologies Drive Large EPAct Tax Deductions for Parking Garages.” The Parking Professional. August 2010. Pg. 22-24.

5.Goulding, Charles, Goldman, Jacob, Most, Joseph. “Energy Tax Aspects of Chillers.” Corporate Business Taxation Monthly. October 2010. Pg. 15-16, 41-42.

6. Goulding, Charles, Goldman, Jacob, Goulding, Taylor. “The Tax Aspects of Thermal Storage and Time-of-Day Pricing.” Corporate Business Taxation Monthly. November 2009. Pg. 13-14, 37-38.

7.Goulding, Charles, Most, Joseph, Marr, Spencer. “The Energy Tax Aspects of Geothermal Heat Pumps.” Corporate Business Taxation Monthly. (To be published).

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