Federal Tax Credit for Insulation – What Homeowners Need to Know

Thanks to the Inflation Reduction Act of 2023, the 25C tax credit for energy-efficient home upgrades—including insulation and air sealing—has been reinstated and expanded.

Key Highlights:

•  2023 Reinstatement (Retroactive):
•   Homeowners could receive a 10% tax credit, up to $500, for insulation installed in their primary residence through December 31, 2023.
•  New Long-Term Program (2023–2032):
•   Starting January 1, 2023, the credit was increased to 30% of the purchase cost, up to $1,200 annually, for qualified insulation and air sealing improvements. This applies through December 31, 2032.

Important Notes:

•  Applies only to taxpaying homeowners.
•  Credit is non-refundable, but reduces federal tax dollar for dollar.
•  Installation must be on your main home (not rentals or secondary homes).
•  Products must meet energy efficiency standards outlined by the IRS or ENERGY STAR.