If you’re a builder, developer, or homeowner, several federal, state, and local incentives can help reduce the cost of residential construction in Florida. However, we must mention that many of the most valuable programs have deadlines, eligibility requirements, and documentation rules that need attention long before a project is complete.
Let’s look at the most significant opportunities available today.
Building tax credits at a glance
| Tax Credit / Incentive | Type | Potential value | Who qualifies? | Key deadline / notes |
| Section 45L Energy Efficient Home Credit | Federal tax credit | $500–$5,000 per unit | Builders and developers of ENERGY STAR or Zero Energy Ready Homes | Homes must generally be sold or leased by June 30, 2026 |
| Low-Income Housing Tax Credit (LIHTC) | Federal tax credit | 4% or 9% credit based on project structure | Developers of qualifying affordable rental housing | Long-term affordability requirements apply |
| Live Local Act Property Tax Exemption | Florida property tax exemption | Up to 100% exemption on qualifying units | Multifamily developments serving workforce and middle-income households | Eligibility depends on income and occupancy requirements |
| Solar Energy Sales Tax Exemption | Florida sales tax exemption | Eliminates state sales tax on qualifying solar equipment | Builders and developers installing solar systems | Applies to eligible renewable energy equipment |
| Florida Graywater System Tax Credit | Florida tax credit | Up to 50% of system cost, capped at $4,200 per system | Developers and homebuilders installing qualifying graywater systems | Available for tax years beginning before January 1, 2027 |
| Local Green Building Incentives | Local rebates and fee reductions | Varies by municipality | Builders pursuing LEED, FGBC, or other green certifications | May include permit rebates, fee reductions, and expedited approvals |
| Section 179D Energy-Efficient Building Deduction | Federal tax deduction | Up to $5.81 per sq. ft. in 2025 ($5.94 in 2026) | Developers of mixed-use or commercial projects with energy-efficient features | Applies to qualifying commercial portions of a project |
You may also be interested in: The homeowner’s guide to tax credits and deductions
1. The biggest home builder tax credit: Section 45L
For many residential developers, the most valuable home builder tax credit is the federal Section 45L Energy Efficient Home Credit. This credit rewards builders who construct homes that meet specific energy-efficiency standards.
Eligible contractors can claim:
- Up to $2,500 per single-family home that meets ENERGY STAR standards
- Up to $5,000 per home certified under the Department of Energy’s Zero Energy Ready Home (ZERH) program
- Between $500 and $5,000 per multifamily unit, depending on certification levels and labor requirements
For example, a developer building a 100-unit multifamily project that qualifies for the full credit could potentially generate up to $500,000 in federal tax credits.
Important deadline: The Section 45L credit is currently scheduled to expire for homes sold or leased after June 30, 2026. Builders with projects in planning or construction should evaluate eligibility now rather than waiting until completion.
2. Affordable housing tax credits
Developers building affordable rental housing may qualify for the federal Low-Income Housing Tax Credit (LIHTC) program.
LIHTC remains the federal government’s primary tool for encouraging affordable housing development. The program provides tax credits that offset construction costs when developers agree to reserve units for qualifying lower-income households.
There are two primary credit structures:
- The 9% credit, generally used for new construction and rehabilitation projects
- The 4% credit, often paired with tax-exempt bond financing
Developers typically sell these credits to investors in exchange for equity financing, reducing the amount of debt needed to complete the project.
Recent federal legislation expanded the program beginning in 2026 by:
- Increasing state allocation authority by 12%
- Lowering the bond financing threshold from 50% to 25% for certain projects
For developers working in the affordable housing space, LIHTC can be one of the most impactful tax incentives available.
3. Florida’s Live Local Act
Florida has also created incentives aimed at increasing housing supply. The state’s Live Local Act provides substantial property tax exemptions for qualifying multifamily developments that reserve units for workforce and middle-income households.
In some cases, eligible projects may receive property tax exemptions approaching 100% on qualifying units. While this isn’t an income tax credit, it can significantly improve long-term project economics.
4. Florida sales tax savings for solar installations
Developers incorporating renewable energy features into new construction may benefit from Florida’s solar energy sales tax exemption. Florida currently exempts qualifying solar energy equipment from state sales tax. That means developers installing solar systems during construction can avoid paying the state’s standard sales tax on eligible components.
5. Florida graywater system tax credit
One lesser-known incentive is Florida’s graywater system tax credit. For tax years beginning between January 1, 2024, and January 1, 2027, eligible developers and homebuilders may claim a credit equal to up to 50% of the cost of qualifying residential graywater systems.
The credit is capped at:
- $4,200 per system
- $2 million in total credits per taxpayer per year
To qualify, the system must be NSF/ANSI 350 Class R certified and installed in Florida residential properties according to state requirements.
6. Local green building incentives
Many Florida cities and counties offer their own incentives for green construction. Depending on the location, developers may qualify for:
- Permit fee rebates
- Impact fee reductions
- Expedited permitting
- Density bonuses
- Utility fee reimbursements
Some municipalities provide financial incentives for projects certified through programs such as LEED or the Florida Green Building Coalition. Because these programs vary by jurisdiction, it’s worth reviewing local opportunities before finalizing development plans.
7. Section 179D for mixed-use projects
If your project includes commercial space, another federal incentive may come into play. Section 179D provides tax deductions for energy-efficient commercial buildings and building improvements.
For tax years beginning in 2025, deductions can reach up to $5.81 per square foot when prevailing wage and apprenticeship requirements are met. The inflation-adjusted amount increases to $5.94 per square foot in 2026. For mixed-use developments that include retail, office, or commercial components, this deduction may be available alongside residential incentives.
Need help evaluating construction tax incentives?
If you’re building homes in Florida and want to understand which incentives may apply to your project, our team can help you evaluate your options and maximize available tax benefits before key deadlines expire. Get in touch so we can help you optimize your strategy.
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