The EPAct Tax Aspects of Hamburger Restaurant LED Lighting

The EPAct Tax Aspects of Hamburger Restaurant LED Lighting

American's have a seemingly insatiable demand for hamburgers both from established large name chains familiar to all American's and fast growing new entrants. The restaurants covered in this article operate over 33,000 U.S. Locations.

Tax Opportunities

Pursuant to Energy Policy Act (EPAct) Section 179D, buildings making qualifying energy-reducing investments in their new or existing locations can obtain immediate tax deductions of up to $1.80 per square foot.

If the building project doesn't qualify for the maximum $1.80 per square foot immediate tax deduction, there are tax deductions of up to $0.60 per square foot for each of the three major building subsystems: lighting, HVAC (heating, ventilating, and air conditioning), and the building envelope. The building envelope is every item on the building’s exterior perimeter that touches the outside world including roof, walls, insulation, doors, windows and foundation.

The magnitude of U.S. hamburger chain square footage and their potential EPAct tax deductions are presented in the following table:

*Total square footage is an estimation based on internet data indicating the average square feet of each location.

LED Lighting EPAct Tax Deductions

Existing hamburger chains are quickly moving to low wattage long life LED lighting which normally qualifies for the full EPAct lighting tax deduction . The fast growing new entrants like Five Guys, and Smash Burger can design LED lighting into their new stores and obtain a new building EPAct lighting tax deduction.

LED/LEED Combination

LEED stands for Leadership in Energy and Environmental Design and is the renowned standard for sustainable buildings in the United States . In conditioned (cooled) LEED buildings, air conditioning is the largest building energy user. Conditioned LEED buildings will qualify for a LED lighting tax deduction of $1.80 per square foot when the buildings HVAC system is very energy efficient.

To qualify for the $1.80 LED lighting tax deduction the building must be modeled in IRS approved software. Building owners should utilize tax engineers who are intimately familiar with the EPAct building modeling process. An experienced tax engineer will be able to confirm before the LED LEED building lighting installation whether it is likely to qualify for the $1.80 LED lighting tax deduction.

McDonalds is among the growing number of hamburger chains incorporating LEED standards into their building design. Arby’s, Burger King, and Wendy’s have LEED certified restaurants as well.

Compared to the average small business, much of a hamburger restaurant’s operating costs are dedicated to energy use. An increasing number of restaurants are investing in achieving LEED certification points through energy reduction measures.


Hamburger chains are increasingly required to disclose calories per serving. A calorie is actually a unit of heat. Just as restaurant customers want to shed calories, hamburger chains can use LED EPAct tax incentives to reduce lighting related energy costs while also reducing heat from excess wattage.


Goulding, Charles, Goldman, Jacob, & Audette, Daniel. “The LED Lighting Tax Aspects of Restaurants” Corporate Business Taxation Monthly, May 2011, Pg. 13-14.

Goulding, Charles, Goldman, Jacob, & Aboff, Amelia. “How LEED 2009 Expands EPAct Tax Savings Opportunities” Corporate Business Taxation Monthly, September 2009, Pg. 11-13.

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